Energy Master Plan 2010

Integrated Energy
Management Master
Plan for Bhutan
Integrated Energy Management Master Plan for Bhutan

Prepared for
Department of Energy
Ministry of Economic Affairs
Royal Government of Bhutan
The Energy and Resources Institute

Integrated Energy Management
Master Plan for Bhutan
Prepared for
Thimphu, Bhutan The Energy and Resources Institute
© Department of Energy, Ministry of Economic Affairs, Thimphu, Bhutan, 2010
All rights reserved. No part of this publication may be reproduced in any form or by any means without the prior
permission of the Department of Energy, Ministry of Economic Affairs, Thimphu, Bhutan
Published by
TERI Press
The Energy and Resources Institute Tel. +91 11 2468 2100 or 4150 4900
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Lodhi Road, New Delhi – 110 003 E-mail teripress@teri.res.in
Web www.teriin.org
For
Ministry of Economic Affairs Tel. +975-2-322505
Thimphu, Bhutan Tel./fax +975-2-335122
Web www.mti.gov.bt
Printed in India
Contents
ACKNOWLEDGEMENTS .....................................................................................................................................................XI
PROJECT TEAM ..............................................................................................................................................................XIII
LIST OF ABBREVIATIONS AND ACRONYMS .......................................................................................................................... XV
CONVERSION FACTORS ................................................................................................................................................... XIX
CHAPTER 1 INTRODUCTION ............................................................................................................................................. 1
CHAPTER 2 ENERGY SECTOR – AN OVERVIEW ................................................................................................................... 3
CHAPTER 3 ENERGY SCENARIOS FOR BHUTAN 2020......................................................................................................... 15
CHAPTER 4 ENERGY SUPPLY OPTIONS FOR BHUTAN ........................................................................................................ 39
CHAPTER 5 DEMAND SIDE EFFICIENCY ENHANCEMENT OR ENERGY DEMAND MANAGEMENT .............................................. 57
CHAPTER 6 OVERARCHING ISSUES: ENERGY, DEVELOPMENT, AND ENVIRONMENT ............................................................ 79
CHAPTER 7 RECOMMENDATIONS ................................................................................................................................... 93
ANNEXURE 3.1 PROJECTED SOCIO-ECONOMIC VARIABLES................................................................................................ 99
ANNEXURE 3.2 LIST OF UPCOMING INDUSTRIES............................................................................................................ 101
ANNEXURE 3.3 PROJECTED ENERGY DEMAND IN BHUTAN, BY FUEL ................................................................................ 103
ANNEXURE 4.1 TARIFF DESIGN .................................................................................................................................... 107
ANNEXURE 4.2 TECHNO-ECONOMIC ANALYSIS DETAILS OF A 5-MW BIOMASS-BASED POWER PLANT................................. 120
ANNEXURE 4.3 BIOMASS DENSIFICATION TECHNOLOGIES .............................................................................................. 123
ANNEXURE 4.4 BIOENERGY TECHNOLOGIES FOR THERMAL APPLICATIONS – POTENTIAL BIOMASS TECHNOLOGY OPTIONS .... 131
ANNEXURE 4.5 SMALL WIND SYSTEMS ......................................................................................................................... 147
ANNEXURE 4.6 GEOTHERMAL ENERGY.......................................................................................................................... 155
ANNEXURE 5.1 ENERGY CONSERVATION TECHNIQUES IN THE BUILDINGS ....................................................................... 157
ANNEXURE 7.1 INSTITUTIONS IN THE ENERGY SECTOR AND THEIR FUNCTIONS ............................................................... 161
REFERENCES ................................................................................................................................................................ 167
BIBLIOGRAPHY ............................................................................................................................................................ 167
INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN III

List of tables
CHAPTER 2
TABLE 1 GROWTH RATE OF GROSS DOMESTIC PRODUCT (GDP) ........................................................................................... 3
TABLE 2 FUELWOOD CONSUMPTION (TONNES), BY DZONGKHAG ........................................................................................ 9
TABLE 3 THERMAL EFFICIENCY OF SELECT COOKING DEVICES THAT USE DIFFERENT FUELS................................................. 10
TABLE 4 USEFUL ENERGY DELIVERED USING DIFFERENT FUELS........................................................................................ 10
TABLE 5 GROWTH RATE OF VALUE ADDED IN THE INDUSTRY ............................................................................................ 11
TABLE 6 SECTORAL SHARE OF GROSS DOMESTIC PRODUCT (% PER YEAR) ......................................................................... 11
TABLE 7 NUMBER OF FARM MACHINERY SUPPLIED TO VARIOUS DZONGKHAGS (FROM 1983 TO MARCH 2005) ..................... 13
TABLE 8 COMPARISON OF PER CAPITA ENERGY AND ELECTRICITY SUPPLY ........................................................................ 13
CHAPTER 3
TABLE 1 PERCENTAGE OF HOUSEHOLDS USING DIFFERENT FUELS (2004/05) ..................................................................... 16
TABLE 2 ASSUMPTIONS FOR SECTORAL VARIABLES FOR ESTIMATING ENERGY DEMAND IN RESIDENTIAL SECTOR ............... 17
TABLE 3 FUEL USE PATTERN, BY RURAL AND URBAN HOUSEHOLDS (%) ............................................................................ 18
TABLE 4 ENERGY INTENSITIES BY END USE AND FUEL TYPE ............................................................................................. 19
TABLE 5 GROWTH IN INDUSTRIES UNDER THREE CATEGORIES ......................................................................................... 21
TABLE 6 GROWTH IN THE NUMBER OF PRODUCTION AND MANUFACTURING UNITS .......................................................... 21
TABLE 7 INDUSTRIES UNDER ENERGY-INTENSIVE CATEGORY .......................................................................................... 22
TABLE 8 SALES OF PRODUCTS OF POWER-INTENSIVE INDUSTRIES.................................................................................... 23
TABLE 9 PRODUCTION OF EXISTING AND UPCOMING ENERGY-INTENSIVE UNITS ............................................................... 24
TABLE 10 SPECIFIC ELECTRICITY CONSUMPTION ............................................................................................................. 25
TABLE 11 ASSUMPTIONS FOR ENERGY DEMAND ESTIMATION FOR NON-ENERGY-INTENSIVE INDUSTRIES ........................... 26
TABLE 12 GROWTH IN TOURIST AND ENERGY INTENSITIES .............................................................................................. 28
TABLE 13 GROWTH RATE IN THE COMMERCIAL SECTOR (%) .............................................................................................. 29
TABLE 14 GROWTH IN COMMERCIAL ESTABLISHMENTS AND ENERGY INTENSITIES ............................................................ 29
TABLE 15 NUMBER OF REGISTERED VEHICLES, BY TYPE AND REGION (2000–04) ............................................................... 32
TABLE 16 PARAMETER ESTIMATES ................................................................................................................................. 33
TABLE 17 FUEL EFFICIENCY FOR DIFFERENT CATEGORIES OF VEHICLES ............................................................................. 33
CHAPTER 4
TABLE 1 CAPACITIES AND GENERATION OF MAJOR HYDROPOWER PLANTS IN BHUTAN ...................................................... 40
TABLE 2 DETAILS OF SELECTED POTENTIAL MAJOR HYDROPOWER PROJECTS .................................................................... 41
TABLE 3 FINANCIAL CHARACTERISTICS, BY PLANT .......................................................................................................... 42
TABLE 4 MEDIUM-CAPACITY POWER PLANTS IDENTIFIED IN THE POWER SYSTEM MASTER PLAN ....................................... 44
TABLE 5 COST OF GENERATION AT DIFFERENT LEVELS OF SUBSIDY ................................................................................... 46
IV INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

LIS T OF TABLES
CHAPTER 5
TABLE 1 IMPORTS OF DIFFERENT CATEGORIES OF MOTOR VEHICLES (IN NUMBER) ............................................................ 69
TABLE 2 FUEL ECONOMY BASED ON TYPICAL VEHICLES LIKELY TO BE OPERATED IN INDIA .................................................. 72
TABLE 3 PROPOSED IMPLEMENTATION SCHEDULE FOR DEMAND SIDE MANAGEMENT (DSM) MEASURES ............................ 75
TABLE 4 IMPACT ASSESSMENT OF PROPOSED STRATEGIES ............................................................................................... 76
TABLE 5 BUDGET ESTIMATES FOR IMPLEMENTATION OF DIFFERENT STRATEGIES FOR DEMAND SIDE
MANAGEMENT (IN MILLION NU) ....................................................................................................................... 77
CHAPTER 6
TABLE 1 SECTOR OF EMPLOYMENT, BY POVERTY STATUS ................................................................................................. 83
TABLE 2 ADAPTATION OPTIONS ACCORDING TO HAZARD TYPE ......................................................................................... 88
ANNEXURE 3.1
TABLE 1 GROSS DOMESTIC PRODUCT (NU BILLION @ 2000 PRICES) .................................................................................. 99
TABLE 2 POPULATION STATISTICS (IN THOUSAND) .......................................................................................................... 99
TABLE 3 GROSS DOMESTIC PRODUCT PER CAPITA (THOUSAND NU @ 2000 PRICES) ......................................................... 100
TABLE 4 TOURIST INFLUX (IN THOUSAND) .................................................................................................................... 100
TABLE 5 NUMBER OF COMMERCIAL ESTABLISHMENTS (SHOPS AND RESTAURANTS) ....................................................... 100
ANNEXURE 3.2
TABLE 1 LIST OF UPCOMING INDUSTRIES IN BHUTAN .................................................................................................... 101
ANNEXURE 3.3
TABLE 1 PROJECTED ELECTRICITY DEMAND (MILLION UNITS) ........................................................................................ 103
TABLE 2 PROJECTED FIREWOOD DEMAND (THOUSAND TONNES) .................................................................................... 103
TABLE 3 PROJECTED LIQUEFIED PETROLEUM GAS (LPG) DEMAND (THOUSAND TONNES) .................................................. 104
TABLE 4 PROJECTED KEROSENE DEMAND (THOUSAND KILOLITRES) ............................................................................... 104
TABLE 5 PROJECTED COAL DEMAND (THOUSAND TONNES) ............................................................................................. 104
TABLE 6 PROJECTED DIESEL DEMAND (KILOLITRES) ...................................................................................................... 104
TABLE 7 PROJECTED PETROL DEMAND (KILOLITRES) ..................................................................................................... 105
TABLE 8 PROJECTED AVIATION TURBINE FUEL (ATF) DEMAND (KILOLITRES) ................................................................... 105
ANNEXURE 4.1
INDICATIVE TARIFF FOR MEDIUM SIZE HYDRO PLANT (CAPTIVE POWER GENERATION) ..................................................... 110
INDICATIVE TARIFF CALCULATION FOR MEDIUM SIZE HYDRO PLANT FOR INDEPENDENT POWER PRODUCTION (IPP) .......... 112
INDICATIVE TARIFF CALCULATIONS FOR CHAMKAR HYDROPOWER PLANT - LARGE HYDRO POWER PLANT WITHOUT GRANT .... 114
INDICATIVE TARIFF CALCULATIONS FOR DAGACHU HYDROPOWER PLANT WITHOUT GRANT .............................................. 116
INDICATIVE TARIFF CALCULATIONS FOR CHAMKAR HYDROPOWER PLANT - LARGE HYDRO POWER PLANT WITHOUT GRANT .... 118
INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN V

LIS T OF TABLES
ANNEXURE 4.2
INDICATIVE TARIFF CALCULATIONS FOR BIOMASS BASED POWER PLANT ......................................................................... 120
ANNEXURE 4.3
TABLE 1 BULK DENSITY OF SELECTED LOOSE BIOMASS .................................................................................................. 123
TABLE 2 CONTRIBUTION OF INPUT COST IN UNIT COST OF BRIQUETTE FOR COARSE GRANULAR WET MATERIALS ............... 126
TABLE 3 POWER REQUIREMENT FOR BRIQUETTING UNITS ............................................................................................. 126
TABLE 4 COMPARISON OF A PISTON PRESS AND A SCREW EXTRUDER ............................................................................. 127
ANNEXURE 4.4
TABLE 1 QUALITATIVE EFFECTS OF VARIOUS FACTORS ON STOVE DESIGN ........................................................................ 134
TABLE 2 TYPICAL OPERATIONAL DATA FOR DIFFERENT TYPES OF GASIFIERS ................................................................... 139
TABLE 3 PRODUCER GAS CHARACTERISTICS FROM DIFFERENT GASIFIERS....................................................................... 139
TABLE 4 COMPARISON OF HEATING VALUE, STOICHIOMETRIC COMBUSTION VOLUMES, AND FLAME TEMPERATURE ........... 140
ANNEXURE 4.5
TABLE 1 CLASSES OF WIND POWER DENSITY AT 10 M AND 50 M ELEVATION .................................................................... 152
TABLE 2 CHARACTERISTICS OF VARIOUS SMALL WIND TURBINES ................................................................................... 153
ANNEXURE 7.1
TABLE 1 MDG GOALS AND THEIR TARGETS .................................................................................................................... 165
VI INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

List of figures
CHAPTER 2
FIGURE 1 ELECTRICITY CONSUMPTION IN 2005, BY DZONGKHAG ....................................................................................... 5
FIGURE 2 TRENDS IN IMPORTS OF DIESEL, PETROL, AND KEROSENE .................................................................................. 5
FIGURE 3 TRENDS IN THE IMPORT OF LIQUEFIED PETROLEUM GAS..................................................................................... 5
FIGURE 4 SANKY DIAGRAM FOR BHUTAN ENERGY SECTOR (2005) ...................................................................................... 6
FIGURE 5 DISTRIBUTION OF POPULATION IN BHUTAN (2005) ............................................................................................ 7
FIGURE 6 ENERGY CONSUMPTION PATTERN IN THE RESIDENTIAL SECTOR, BY DZONGKHAG ................................................. 8
FIGURE 7 ANNUAL ARRIVALS IN BHUTAN ....................................................................................................................... 12
CHAPTER 3
FIGURE 1 ELECTRICITY DEMAND .................................................................................................................................... 20
FIGURE 2 FUELWOOD DEMAND ...................................................................................................................................... 20
FIGURE 3 LPG DEMAND ................................................................................................................................................. 20
FIGURE 4 KEROSENE DEMAND ....................................................................................................................................... 20
FIGURE 5 INDUSTRIAL GDP AS A PERCENTAGE SHARE TO TOTAL GDP ................................................................................ 22
FIGURE 6 ELECTRICITY DEMAND IN ENERGY-INTENSIVE INDUSTRIES .............................................................................. 25
FIGURE 7 DEMAND FOR COAL IN INDUSTRIES ................................................................................................................. 26
FIGURE 8 ELECTRICITY DEMAND IN NON-ENERGY-INTENSIVE INDUSTRIES ....................................................................... 27
FIGURE 9 DEMAND FOR WOOD IN NON-ENERGY-INTENSIVE INDUSTRIES .......................................................................... 27
FIGURE 10 INFLOW OF FOREIGN (PAID TOURISTS) IN BHUTAN ......................................................................................... 28
FIGURE 11 ELECTRICITY DEMAND ................................................................................................................................. 30
FIGURE 12 LPG DEMAND ............................................................................................................................................... 30
FIGURE 13 FUELWOOD DEMAND .................................................................................................................................... 30
FIGURE 14 TRANSPORT, STORAGE, AND COMMUNICATION, PERCENTAGE SHARE AND GROWTH RATE ................................. 31
FIGURE 15 IMPORT OF MOTOR VEHICLES ........................................................................................................................ 31
FIGURE 16 VEHICLE CATEGORY, BY FUEL TYPE ................................................................................................................. 31
FIGURE 17 TRENDS IN THE QUANTITY OF IMPORTED FUELS CONSUMED IN THE TRANSPORT SECTOR .................................. 33
FIGURE 18 DEMAND FOR DIESEL .................................................................................................................................... 34
FIGURE 19 DEMAND FOR PETROL................................................................................................................................... 34
FIGURE 20 DEMAND FOR AVIATION TURBINE FUEL.......................................................................................................... 34
FIGURE 21 PROJECTED TOTAL ENERGY DEMAND IN THOUSAND TOE, UP TO 2020 ............................................................... 34
FIGURE 22 ENERGY CONSUMPTION IN BHUTAN BY 2010 IN BAU SCENARIO, BY FUEL ......................................................... 35
FIGURE 25 ENERGY CONSUMPTION IN BHUTAN BY 2010 IN EE SCENARIO, BY FUEL ............................................................ 35
INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN VII

LIS T OF FIGURES

FIGURE 28 ENERGY CONSUMPTION IN BHUTAN BY 2010 IN HIG SCENARIO, BY FUEL .......................................................... 36
FIGURE 31 ENERGY CONSUMPTION IN BHUTAN BY 2010 IN HIGEE SCENARIO, BY FUEL ...................................................... 36
CHAPTER 5
FIGURE 1 A WOMAN CARRYING LPG CYLINDER ............................................................................................................... 59
FIGURE 2 SOURCES OF LIGHTING IN HOUSEHOLDS (CENSUS 2005) ................................................................................... 60
FIGURE 3 HYDROGEN COOK STOVE DEVELOPED BY BANARAS HINDU UNIVERSITY, VARANASI ............................................ 62
FIGURE 4 ENERGY INPUTS IN THE AGRICULTURE SECTOR IN BHUTAN ............................................................................... 73
CHAPTER 6
FIGURE 1 ENERGY SERVICES CONTRIBUTE TO BREAKING THE DEPRIVATION TRAP ............................................................. 81
FIGURE 2 DISTRIBUTION OF INDUSTRY, BY SIZE (%) ........................................................................................................ 83
CHAPTER 7
FIGURE 1 EXISTING INSTITUTIONAL INFRASTRUCTURE IN ENERGY SECTOR ...................................................................... 94
FIGURE 2 SUGGESTED INSTITUTIONAL SET-UP ................................................................................................................ 96
FIGURE 3 COST PER PERSON PER KILOMETER FOR PETROL VEHICLE AND ELECTRIC VEHICLE AT DIFFERENT OCCUPANCIES ... 97
ANNEXURE 4.3
FIGURE 1 VARIATION IN BRIQUETTE DENSITY WITH PRESSURE AT DIFFERENT BIOMASS FEED TEMPERATURE:
(A) MUSTARD STALK, (B) GROUNDNUT SHELL ................................................................................................. 125
FIGURE 2 RAM PISTON TYPE BRIQUETTING PRESS ........................................................................................................ 126
FIGURE 3 SCHEMATIC OF SCREW BRIQUETTING MACHINE WITH BIOMASS STOVE DIE HEATER .......................................... 127
FIGURE 4 SCHEMATIC OF PELLETIZING MACHINE .......................................................................................................... 128
FIGURE 5 LOW-DENSITY SCREW EXTRUDING BRIQUETTING MACHINE ............................................................................ 128
FIGURE 6 LOW-DENSITY BEEHIVE BRIQUETTING MOULD ............................................................................................... 129
ANNEXURE 4.4
FIGURE 1 FIRE TRIANGLE ............................................................................................................................................ 131
FIGURE 2 REPRESENTATIVE MODEL OF BIOMASS COMBUSTION MECHANISM ................................................................. 132
FIGURE 3 DESIGN CONSIDERATIONS FOR A STOVE ........................................................................................................ 133
FIGURE 4A UPDRAFT GASIFIER .................................................................................................................................... 137
FIGURE 4B DOWNDRAFT GASIFIER .............................................................................................................................. 138
FIGURE 4C CROSS-DRAFT GASIFIER .............................................................................................................................. 138
VIII INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

LIS T OF FIGURES
FIGURE 5 NATURAL DRAFT GASIFIER STOVE OPERATING ON INVERSE DOWNDRAFT PRINCIPLE ........................................ 141
FIGURE 6 GASIFIER TURBO-STOVE ............................................................................................................................... 141
FIGURE 7 KVIC FLOATING DOME BIOGAS PLANT ............................................................................................................ 143
FIGURE 8 A TEAM REACTOR ......................................................................................................................................... 144
FIGURE 9 TERI’S ENHANCED ACIDIFICATION AND METHANATION PROCESS ..................................................................... 144
ANNEXURE 4.5
FIGURE 1 WIND FARM USING SMALL WIND MACHINES .................................................................................................. 147
FIGURE 2 GENERATION OF WIND ENERGY AND ITS DISTRIBUTION .................................................................................. 148
FIGURE 3 HORIZONTAL AND VERTICAL AXIS WIND TURBINES ........................................................................................ 149
FIGURE 4 INTERNAL STRUCTURE OF HORIZONTAL AXIS WIND TURBINE .......................................................................... 149
FIGURE 5 BASIC PART OF SMALL WIND TURBINE........................................................................................................... 149
FIGURE 6 SMALL WIND TURBINE FOR HOME LIGHTING.................................................................................................. 150
FIGURE 7 WIND TURBINE CONNECTED TO GRID ............................................................................................................. 150
FIGURE 8 LEVELS OF FLAGGING CAUSED BY THE PREVAILING WIND DIRECTION .............................................................. 152
ANNEXURE 7.1
FIGURE 1 GETANA MODEL ........................................................................................................................................... 164
INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN IX

List of boxes
CHAPTER 4
BOX 1 BUILD, OPERATE, OWN, AND TRANSFER MODEL .................................................................................................... 43
BOX 2 BIOENERGY-RELATED ISSUES ............................................................................................................................... 49
BOX 3 100-KW SENGOR MICRO HYDROPOWER DEMONSTRATION PROJECT........................................................................ 53
CHAPTER 5
BOX 1 A COMPARISON OF A 60-W INCANDESCENT LAMP WITH AN 11-W COMPACT FLUORESCENT LAMP (CFL) ..................... 64
BOX 2 NEPAL’S EXPERIENCE WITH ELECTRIC VEHICLE ..................................................................................................... 72
CHAPTER 6
BOX 1 CONSTRAINTS IN FOOD GRAIN PRODUCTION ......................................................................................................... 82
BOX 2 RURAL–URBAN MIGRATION: DRIVERS AND FALLOUT ............................................................................................ 82
BOX 3 CHRONOLOGY OF CONSERVATION LEGISLATION AND INITIATIVES IN BHUTAN.......................................................... 85
BOX 4 DETAILS SOUGHT FOR ENVIRONMENTAL CLEARANCE OF HYDROPOWER PROJECTS .................................................. 86
BOX 5 NOTABLE CLIMATE EXTREME EVENTS IN BHUTAN .................................................................................................. 87
BOX 6 VIABILITY OF POWER INTENSIVE INDUSTRIES ...................................................................................................... 91
X INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

Acknowledgements
T
his Integrated Energy Management support without which this project would not have
Master Plan draws its inspiration from the been possible.
visionary leadership of His Majesties, the We also thank the officials of the various
fourth and fifth Kings of Bhutan. We are grateful ministries of the Royal Government of Bhutan,
to His Majesties for their inspiration throughout. private and public sector corporations, directors
Our special thanks go to Dasho Sonam Tshering, of various hydropower projects of the NHPC Ltd
Secretary, Ministry of Economic Affairs; Mr Yeshi and North Eastern Electric Power Corporation
Wangdi, Director General, Department of Energy, Ltd.
Ministry of Economic Affairs; Mr Bharat Tamang, Our special thanks are due to Mr Sameer
Managing Director, Bhutan Power Corporation Maithal, ex Director, EET Division, TERI, who
Ltd; Dr D B Dhital, Joint Director, Forest Resources led this exercise till 2006; Mr Ajoy Acharya,
Development Division, Department of Forest, presently Special Secretary (Defence Production),
Ministry of Agriculture; Mr Dasho Chhewang Ministry of Defence, Government of India;
Rinzin, Managing Director, Druk Green Power Ms Benita Gurung, Ex project Manager,
Corporation Ltd; Mr B B V Ramana Rao, Senior Department of Energy, Royal Government of
Consultant, Bhutan Power Corporation; and heads Bhutan, as well as our ex-colleagues and team
of various divisions of the Department of Energy members Mr Mahesh Vipradas, Ms Kusum Lata
for their encouragement and expert guidance Jain, and Mr Arabinda Laskar.
during the preparation of this Master Plan. We are also grateful to Dr R K Pachauri,
We are grateful to HE Mr Sudhir Vyas, ex- Director-General, TERI, and Dr Leena Srivastava,
Ambassador; HE Mr Pawan K Verma, Ambassador Executive Director,TERI, for their constant support
of India to Bhutan; Dr T V Nagendra Prasad, ex and guidance, along with other colleagues from
Deputy Chief of the Mission; and Mr Thanglura TERI and the Department of Energy, Bhutan.
Darlong, Deputy Chief of the Mission, Embassy of We also thank Ms Rita Grover and Ms Nirmal
India, Bhutan, for their guidance at every stage of Gupta, TERI, for their efficient secretarial support
this project. We specially acknowledge the Ministry and TERI Press for giving this report a final
of External Affairs, Government of India, for its shape.
INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN XI

Project team
ADVISERS
Mr Karma Tshering, Head, Planning and Coordination Division (PCD), Department of Energy
Mr Bharat Tamang, Managing Director, Bhutan Power Corporation Ltd
Mr Amit Kumar, Director, Energy Environment Technology Development Division, TERI
DOE TEAM
Former officials who were involved in the project management
Dasho Sonam Tshering, Director General (till July 2007), Department of Energy (DOE)
Dasho Bharat Tamang, Head, PCD (till January 2008), DOE
Ms Benita K Gurung, National Project Manager (from January 2005 to May 2007),
IEMMP Project, PCD, DOE
Current project officials

Project management officials in the DOE
Mr Yeshi Wangdi, Director General, DOE, Ministry of Economic Affairs (MoEA)
Mr Karma Tshering, Chief Engineer/Head, PCD, DOE (was also the National Project
Manager for IEMMP Project from June 2007 to January 2008)
Mr Karma Tshewang, National Project Manager (February 2008 – Current),
IEMMP Project, PCD, DOE
Mr Jigme Rinzin, Junior Engineer, PCD, PCD
Mr Younten Lhendup, Project Assistant, IEMMP Project, PCD, DOE
Project field officials from the DOE

Mr Gem Dorji, Principal Engineer, Data Section, PCD, DOE
Mr Phuntsho Namgyal, Dy. Executive Engineer (Civil), HMSD, DOE
Mr Sonam Tshering, Engineer (Electrical), HMSD, DOE
Mr Karma P Dorji, RE Project Manager, PCD, DOE
Ms Wangmo, Assistant Engineer, PCD, DOE
Ms Dechen Wangmo, Assistant Engineer, PCD, DOE
Mr Sonam Chedup, Sr. ICT Officer, DOE/MoEA
Mr Kinzang Sonam, Head, Meteorology Section (MS), HMSD, DOE
Mr Norbu Wangdi, Meteorology Technician, MS, HMSD, DOE
INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN XIII

PROJECT TEAM
TERI TEAM
Mr Shirish Garud, Fellow
Ms Divya Datt, Fellow
Ms Shilpa Nischal, Associate fellow
Mr Souvik Bhattacharjya, Research Associate
Mr Alok Kumar Jindal, Research Associate
Ms Priya Dagar, Research Associate
EDITORIAL AND PRODUCTION TEAM

Ms Madhu Singh Sirohi
Dr Richa Sharma
Mr Mahfooz Alam
Mr R K Joshi
Mr T Radhakrishnan
List of abbreviations
and acronyms
°C degree Celsius DHI Druk Holding and Investments
ADB Asian Development Bank Ltd
AMC Agriculture Machinery Centre DISL Druk Iron and Steel Plant
ASTRA Application of Science and DoE Department of Energy
Technology to Rural Areas DPRs detailed project reports
ATF aviation transport fuel DPT Druk Phuensum Tshogpa
BAU business-as-usual scenario DRI direct reduced iron
BCCL Bhutan Calcium Carbide Ltd DSM demand side management
BDFC Bhutan Development Finance DST Department of Science and
Corporation Technology
BEA Bhutan Electricity Authority DYT Dzongkhag Yargay Tshochung
BEE Bureau of Energy Efficiency EAF electric arc furnace
BFAL Bhutan Ferro Alloys Ltd ECBC Energy Conservation Building
BIMSTEC Bay of Bengal Initiative for Multi- Code
sectoral Technical and Economic ECOs energy conservation opportunities
Cooperation EdL Electricite du Laos
Bioenergy biomass energy EE energy efficient
BOOT build, operate, own, and transfer ER equivalence ratio
BPC Bhutan Power Corporation ESCO energy service company
BSL Bhutan Steels Ltd ESMAP Energy Sector Management
BTF Bhutan Trust Fund Assistance Programme
BTU British thermal unit FAO Food and Agriculture
CaO/BaO calcium oxide/barium oxide Organisation
CBD Convention on Biological FDCL Forest Development Corporation
Diversity Ltd
CDM Clean Development Mechanism FDI foreign direct investment
CFLs compact fluorescent lamp FNCA Forest and Nature Conservation
CH4 methane Act
CHP combined heat and power FO furnace oil
CITES Convention on International FYP Five-year Plan
Trade in Endangered Species GDP gross domestic product
CLACC climate change GEF Global Environment Facility
CNG compressed natural gas GHG greenhouse gas
CO carbon monoxide GI galvanized iron
DCCL Druk Cement Company Ltd GJ/h.m2 Gigajoule per hour per metre
DGPC Druk Green Power Corporation square
INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN XV

LIS T OF ABBREVIATIONS AND ACRONYMS
GLCs government-linked companies LBNL Lawrence Berkeley National

GLOF glacier lake outburst flood Laboratory
GNH Gross National Happiness LDCs least developed countries
GoI Government of India LDO light diesel oil
GoL Government of Laos LEAP long-range energy alternatives
GWh gigawatt-hours planning
GWP Global Warming Potential LED light-emitting diodes
GYT Gewog Yargay Tshochung LHV low heating value
HBI hot briquetted iron LNG liquefied natural gas
HDR hot dry rock LPG liquefied petroleum gas
HHV high heating value MCA multiple criteria analysis
HIG high growth MDGs Millennium Development Goals
HIGEE high growth coupled with energy MHV medium heating value
efficiency MJ megajoule
HMSD Hydro-Met Service Division MJ/Nm3 megajoule per Newton cubic
HSD high speed diesel metre
IC internal combustion MnO manganese oxide
ICIMOD International Center for MNRE Ministry of New and Renewable
Integrated Mountain Energy
Development MoA Ministry of Agriculture
IDC Industrial Development Centre MoEA Ministry of Economic Affairs
IDD inverted downdraft MoEF Ministry of Environment and
IEA International Energy Agency Forests
IEMMP Integrated Energy Management MoIC Ministry of Information and
Master Plan Communications
IIED International Institute for msl mean sea level
Environment and Development MT million tonnes
IISc Indian Institute of Science MU million unit
IIT Delhi Indian Institute of Technology, MW megawatt
Delhi NAPA National Adaptation Programme
IPCC Intergovernmental Panel on of Action
Climate Change NATCOM National Communication
IPP independent power producer NBP National Biogas Programme
KEVA Kathmandu Electric Vehicle NCCBM National Council for Cement and
Alliance Building Materials
kJ kilojoules NEC National Environment
kl kilolitre Commission
kV kilovolt NGOs non-governmental organizations
KVIC Khadi and Village Industries NHB National Housing Board
Commission NHPC National Hydro Power
kW kilowatt Corporation
kWh kiowatt-hour
XVI INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

LIS T OF ABBREVIATIONS AND ACRONYMS
NRDC Natural Resources Development SED Sustainable Energy Department

Corporation SPV solar photovoltaic
NSB National Statistical Bureau SQCA Standards and Quality Control
Nu Ngultrum Authority
O&M operation and maintenance SVO straight vegetable oils
OoCC Office of the Census SWERA Solar and Wind Energy Resource
Commissioner Assessment
PAH polycyclic aromatic hydrocarbons tCO2 tonnes carbon dioxide
PCAL Penden Cement Authority Ltd TERI The Energy and Resources
PCD Planning and Coordination Institute
Division TOE tonnes of oil equivalent
PIC products of incomplete TSP total suspended particulates
combustion TV television
PLF plant load factor UN United Nations
PMT per metric tonne UNCCD UN Convention on Combating
PV photovoltaic Desertification
R&D research and development UNDP United Nations Development
RED Renewable Energy Department Programme
REMP Rural Electrification Master Plan UNEP United Nations Environment
REs renewable energies Programme
RESCOM Rural Energy Service Concession UNFCCC United Nations Framework
Model Convention on Climate Change
RET renewable energy technology US United States
RGoB Royal Government of Bhutan USD United States dollar
RNR renewable natural resource VOC volatile organic compound
RPM revolution per minute WB World Bank
Rs rupees WEF World Economic Forum
RSPN Royal Society for Protection of WRMP Water Resource Management
Nature Plan
RSTA Road Safety and Transport WWF World Wildlife Fund
Authority
SAARC South Asian Association for
Regional Cooperation
INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN XVII

Conversion factors
Electricity: Fuels energy conversion factors

6
1 MU = 1*10 kWh 1 kl ATF = 0.836 TOE
1 MWh = 1000 kWh 1 tonnes of briquette = 0.32 TOE
1 tonnes of coal = 0.282 TOE
Energy: 1 kl of diesel = 0.899 TOE
1 calorie = 0.003968321 BTU 1 kWh = 0.0000857 TOE
1 calorie = 4.1868 joules 1 kl of furnace oil = 0.989 TOE
1 calorie = 0.000001163 kWh 1 tonnes of fuelwood = 0.32 TOE
1 kilocalorie = 1000 calories 1 kl of kerosene = 0.882 TOE
1 kilocalorie = 0.001163 kWh 1 kl of light diesel oil = 0.911 TOE
1 kilojoule = 0.0002777778 kWh 1 tonnes of LPG = 1.13 TOE
1 TOE = 41.868 GJ 1 kl of petrol = 0.815 TOE
1 TOE = 11.630 MWh
1 TOE = 10.0 giga-calories
1 TOE = 308 gallons
1 kWh = 3412.142 BTU
Technical terms used in the report

TOE = tonnes of oil equivalent
kWh = kilowatt-hour
MU = million units
kcal = kilocalorie
m2 = square metre
MT = million tonnes
kl = kilolitre
TOE/capita/year = tonnes of oil equivalent per capita per year
kWh/capita/year = kilowatt hour per capita per year
kWh/hh/annum = kilowatt hour per household per annum
kg/hh/annum = kilogram per household per annum
lit/hh/annum = litre per household per annum
kV = kilovolts
MW = Megawatt
GWh = Gigawatt-hour
Nu/unit = Ngultrum per unit
Nm3/h m2 = Newton metre cube per hour per metre square
INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN XIX

CHAPTER 1
Introduction
BACKGROUND both at the rural and

‘Gross National Happiness
Under the Ninth Five-year Plan (2002–08), urban levels. This
is more important than
the Department of Energy (DoE), Ministry of integrated approach
Gross National Product’
Economic Affairs (formerly Ministry of Trade provides various policy
His Majesty King Jigme
and Industry), undertook a study to prepare an options, in line with
Singye Wangchuck, 1972
Integrated Energy Management Master Plan the current policies
(IEMMP) for Bhutan. This was a Government and Vision 2020, for
of India assisted study for which The Energy future development of the kingdom.
and Resources Institute (TERI), New Delhi, was The overall objective of the ‘Gross National
appointed as a consultant. Happiness’ is based on four widely accepted
In the first phase of the study, Bhutan Energy sustainable development principles, as listed
Data Directory 2005 was published, which covered, below.
for the first time, the energy demand and supply 1 Equitable socio-economic development
balance for 2005 and potential of energy resources. 2 Conservation of the natural environment
It also reviewed the status of the energy sector, 3 Promotion of cultural heritage
including the institutional arrangements. The Data 4 Establishment of good governance
Directory included the survey of the residential PROJECT PLANNING
sector and energy audits of major industries.
The project began on 1 January 2005 and was
This report, second in the series, analyses a
carried out in three phases.
wide range of issues, which mainly relate to the
1. Phase I (January 2005 to May 2006)
energy sector of Bhutan. This report presents the
2. Phase II (June 2006 to December 2006)
objectives of the study, approach and methodology,
3. Phase III (January 2007 to December 2009)
future outlook of the energy sector till 2020,
demand and supply analyses, impacts of energy
Phase I
on economy, and interdependence of development
and energy. Various laws/regulations have also been The objective of Phase I was to prepare an energy
analysed, along with assessment of social impacts database and energy balance for the country.
of supplying energy to rural areas. Activities undertaken under this phase included
the following.
PROJECT OBJECTIVE AND METHODOLOGY # Sectoral energy consumption studies, which
The objective of the IEMMP is to develop an covered the following sectors.
all-encompassing framework, which would give $ Domestic
a holistic overview of the demand and supply $ Commercial establishments and institutions
scenarios, along with recommending strategies (up $ Industry
to 2020) for the sustainable supply of energy for $ Agriculture
the socio-economic development of the kingdom, $ Transport
INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN 1

CHAPTER
1 INTRODUCTION
# Energy resources and supply assessment, Phase III

covering the following. The objective of Phase III was recommending
$ Fossil fuels policies and strategies that would steer the energy
$ Renewables (hydro, solar, wind, and sector and the economy, at large, towards optimal
biomass) use of energy resources linked to appropriate
$ Electricity energy technologies.
# Energy conservation studies for industries and
buildings Activities undertaken included the following.
# Design and setting up of energy efficiency # Preparing IEMMP
laboratory # Submitting a draft report
# Technology assessment of appliances and # Conducting stakeholders’ workshop
gadgets # Preparing a final report
# Preparation of energy balance
# Stakeholder consultations and conducting The deliverables were as follows.
workshops # Perspective planning for the energy sector
# Preparing an energy management information
Phase I also covered the following major initiatives system
and activities.
# Household energy survey of 5496 households STRUCTURE OF THE REPORT
# Energy audits of three major industries and The report is structured in such a way that it
buildings presents the comprehensive analysis of all the
# Assessment of solar and wind resources by sectors, both from supply as well as demand
using secondary data sides. Chapter 2 covers the overall energy scenario.
# Extensive consultations with stakeholders Demand and supply projection scenarios and
their analyses are covered in Chapter 3. Chapter
Deliverables included the following. 4 discusses the strategies recommended for
# Energy database and energy balance energy efficiency and energy resource demand
# Energy laboratory and resource centre management. Chapter 5 gives a detailed analysis
of the energy resources and supply side options,
Phase II especially for the promotion of hydropower and
The objective of Phase II was to develop an energy utilization of renewable energy, including supply
profile for the country in terms of supply options side issues and strategies for augmenting energy
(present and future) and demand forecast. supply for energy security. Chapter 6 discusses
Activities under this phase included energy the overall approach to IEMMP and practices
modelling, preparing energy profile, and conducting and also presents policy recommendations and
stakeholder workshops. discussions on overarching issues in the context
Deliverables included the following. of development process.
# Preparing an energy atlas
# Preparing an energy accounting model for the
kingdom, along with various energy scenarios
for the period 2007–20.
2 INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

CHAPTER 2
Energy sector – an overview
BACKGROUND INFORMATION ON BHUTAN the first Five-year Plan (1961–66) till the Ninth
Bhutan is a landlocked country situated between Five-year Plan (2002–08),2 the country has seen
India and China in the fragile eastern Himalayas. planned and steady economic development and
Its population as per Census 2005 is 634 982. has gone through substantial transformation.
Bhutan covers an area of 38 394 km2, roughly Indo-Bhutan bilateral relationship plays an
spread 140 km north to south and 275 km east important role in the development of Bhutanese
to west. The altitude varies from 100 m above economy. India and Bhutan have had trade relations
the mean sea level (msl) in the southern tropical for centuries, and the ties grew stronger after
region to 7550 above the msl in the northern the Independence of India in 1947. The historic
alpine region. The country is blessed with natural India–Bhutan Treaty of 1949 laid the foundation
forests and is one of the 10 biodiversity hotspots for Indo-Bhutan relations. The power sector, along
notified by the United Nations (UN). The country with the health and education sectors, is among the
receives fair amount of rainfall, varying from major sectors in which India has made significant
500 mm in the north to 5000 mm in the south. contributions in terms of investment, capacity
Situated in high altitude Himalayas, Bhutan has building, and technology transfer.
667 glaciers and 2674 glacier lakes,1 which feed BHUTAN’S GROSS DOMESTIC PRODUCT
four major rivers and their tributaries, making
The growth rate of the gross domestic product
the country rich in hydropower resources. These
(GDP, % per year) of the country, from 2003 to
geographical features, landlocked condition, and
2008, is presented in Table 1.
unique environment pose unique challenges
and opportunities for Bhutan as it pursues the
development of its economy sector.
After centuries of isolation, Bhutan
Table 1
opened its economy in 1950s and
started following a path of sustainable GROWTH RATE OF GROSS DOMESTIC PRODUCT (GDP)
and cautious development, popularly Contributions to growth (supply) (%)
known as the ‘middle path’ of GDP Agriculture Electricity and Construction Other Services
development. So far, it has followed water industries
the path of development sustainably, 2003 9.0 0.6 1.9 2.2 0.5 3.8
causing minimum damage to the 2004 7.0 0.5 0.8 1.0 0.4 4.3
environment and ecology. 2005 6.6 0.3 0.4 0.5 0.4 5.3
Planned development started in
2006 6.4 0.3 2.5 -1.0 0.5 4.1
1961 when the first Five-year Plan
2007 14.1 0.2 10.7 -0.4 0.7 2.6
was implemented with the help of
the Government of India. Right from 2008 11.5 0.4 7.2 0.0 0.8 3.2
1
Details available at <http://www.un.org/Pubs/chronicle/2002/issue3/ +0302p48_glacial_lakes_flood_threat.html>, last accessed on 10
May 2007.
2
The Ninth Plan period was extended to 2008 by the Royal Government of Bhutan.

CHAPTER
2 ENERGY SECTOR – AN OVERVIEW
DEVELOPMENT AND CHARACTERISTICS OF # Industries are the largest consumer of electricity

BHUTAN’S ENERGY SECTOR in the country. In 2005, the sector consumed
Power sector development 419 MU (65% of the total consumption) of
electricity.
Electricity was introduced for the first time in
# Institutional and commercial sectors consumed
Bhutan in 1964 when the first diesel generator sets
118.88 MU (18.76 % of the total consumption)
were installed at Pheuntsholing and Samtse. This
of electricity.
was followed by the development of hydropower,
# The residential sector consumed 89 MU
and the first hydropower plant with a capacity
of electricity in 2005 (14.5% of total
of 360 kW was commissioned in 1967 to supply
consumption).
electricity to the capital town of Thimphu. The
# The agriculture and transport sectors consume
power sector got a boost in 1988 when Chukha
negligible amount of electricity.
Hydropower Plant with a capacity of 336 MW was
commissioned. With the commissioning of Chukha
Electricity constituted 15.7% of the total energy
Hydropower Plant, Bhutan started exporting
supply in the country during 2005.
electricity to India, earnings of which started
Figure 1 shows the electricity consumption in
funding its socio-economic development. Today,
different Dzongkhags in 2005.
about 45% of its export earnings are through the
export of electricity, and this earning has also been Fuelwood
instrumental in the development of infrastructure
The main source of primary energy in Bhutan
like roads, hospitals, and school, besides providing
is fuelwood obtained from forests. The country
impetus to industrial development.
consumed 724 597 tonnes of fuelwood during
Another major milestone in hydropower
2005, which accounted for 56.8% of the total
development was achieved in 2007 when Tala
primary energy supply. In addition to fuelwood,
Hydropower Plant with a capacity of 1020 MW
other biomass fuels, which are being used in small
was fully commissioned.
quantities, include briquettes made from saw dust
Bhutan’s economic growth is closely related to
and agriculture residue.
the development of its power sector. The phased
commissioning of the Tala Power Project in 2006
Petroleum fuels
boosted the GDP growth sharply in 2007. The
growth was slightly less in 2008, which was due About 19% of the total energy is met from
to high base effect. imported petroleum fuels like diesel, petrol,
kerosene, liquefied petroleum gas (LPG), furnace
Electricity supply and consumption trends oil, aviation turbine fuel, light diesel oil (LDO),
Some salient features of Bhutan’s electricity sector and so on. Diesel and petrol feature amongst the
are summarized below. top imports in the country on import value basis.
# Power generation in the country in 2005 was In 2005, 51 460 kilolitres of diesel was imported
2521.25 MU, while 18.39 MU of electricity against the import of 13 879 kilolitres of petrol. In
was imported. Of the total electricity generated, addition, during the same year, 12 545 kilolitres of
1793.76 MU of electricity was exported and kerosene and 4472 million tonnes (MT) of LPG
745.88 MU was consumed in the country. were imported. Figures 2 and 3 show trends in the
# Of the total electricity consumed in the country, import of petroleum fuels.
619 MU of power was sold and 112.43 MU of
the electricity was lost within the system. The Coal
balance met the auxiliary power requirement in Coal meets 8% of the energy demand in the
the power plants. country. It is mostly used in the industrial sector.
# Peak demand in 2005 was 120 MW. The total coal consumption in the country during
2005 was 97 509 tonnes. The total coal mined

CHAPTER
ENERGY SECTOR – AN OVERVIEW 2
FIGURE 1 ELECTRICITY CONSUMPTION IN 2005, BY DZONGKHAG
from local coal mines was 85 279 tonnes, while

60 607 tonnes of coal was imported in the same
year. Bhutan also exported 48 377 tonnes of coal
in 2005.
FIGURE 3 TRENDS IN THE IMPORT OF LIQUEFIED

PETROLEUM GAS
SECTORAL ENERGY CONSUMPTION

The sectoral energy consumption for 2005 is
FIGURE 2 TRENDS IN IMPORTS OF DIESEL, PETROL, AND shown in Figure 4.
KEROSENE

CHAPTER
FIGURE 4 SANKY DIAGRAM FOR BHUTAN ENERGY SECTOR (2005) 5
Residential sector While rural households primarily depend on

Population distribution firewood, the urban households rely more on
Bhutan’s population of 634 982 (Census 2005) is electricity and petroleum fuels.
distributed in 20 Dzongkhags. About 69% of this Figure 6 shows energy consumption in the
population lives in rural areas and 31% lives in residential sector, by Dzongkhag.
urban areas. Seventy-five per cent of this population
Electrification status
is concentrated in nine Dzongkhags, of which six
As per the 2005 statistics, the country has 126 115
are in the western region, two in the central region,
households, of which 38 311 households are urban
and only one in the eastern region. Figure 5 shows
households and the remaining 87 804 households
the distribution of population, by Dzongkhag.
are rural households. Of these, 36 923 urban
The residential sector accounts for 48.7% of
households (96.4%) and 35 140 rural households
the total energy consumption, making it a highest
(40%) were electrified, as of 2005.
energy consumer. The sector’s 91% demand is met
The Royal Government of Bhutan (RGoB)
by biomass, and the remaining 9% is accounted for
is pursuing rural electrification, with one of the
by fuels like LPG, electricity, and kerosene. In the
objectives being reducing fuelwood consumption.
residential sector, energy is mainly used for cooking
These rural households consumed 89 MU of
(66% of the total residential energy share),4 which
electricity in 2005, which was 14.6% of the total
is followed by fodder cooking (26%). There is a
electricity consumption during the same period.
significant difference in the energy consumption
patterns between the rural and urban areas.
3
All units are in TOE.
4
It should be noted here that in a large number of households, same device is used for both cooking and space heating, making it difficult
to apportion fuel use between the two end uses; in such a case, fuel use is apportioned to cooking.

CHAPTER
FIGURE 5 DISTRIBUTION OF POPULATION IN BHUTAN (2005)
In the Ninth Five-year Plan, as of June 2007, Fodder cooking is treated separately at the end of
15 148 households have been electrified. In the this section.
Tenth Five-year Plan (2008–13), a total of 43 951 Energy consumption for 2005, by fuel and end
rural unelectrified households will be electrified, use, as estimated by the survey of 5450 households,
thereby resulting in 100% rural electrification. carried out in Bhutan under the IEMMP project,
is discussed subsequently.
Fuels and energy resources used in the
residential sector Consumption analysis, by fuel
The residential sector uses fuelwood, LPG, Fuelwood
electricity, and kerosene as major fuels. The energy While the choice of the fuel depends on the
consumption in the residential sector in Bhutan availability of fuels and their costs, fuelwood is
is dominated by high consumption of fuelwood the most commonly used fuel in Bhutan and
and relatively low use of modern fuels like LPG. constitutes about 90% of the energy used in the
Additionally, briquettes for space heating are being residential sector.
increasingly used in urban areas. On the other Rural areas have higher percentage of population
hand, solar photovoltaic (PV) systems have been (69%), which is allowed to collect fuelwood free of
set up in remote areas for lighting purpose. royalty, as per the policy of the RGoB. Rural areas
Major fuel-consuming activities in the residential are also the largest consumers of fuelwood. A total
sector are as follows. of 69 013 households use fuelwood as the main
# Cooking source of cooking fuel (Census 2005).
# Lighting Fuelwood is collected mostly by women, and
# Space heating (many times this is done with the survey indicates that on an average, one person
device that is used for cooking) month per year is spent in collecting fuelwood. A
# Fodder cooking in rural areas survey of household energy consumption carried

CHAPTER
FIGURE 6 ENERGY CONSUMPTION PATTERN IN THE RESIDENTIAL SECTOR, BY DZONGKHAG
out by TERI under the IEMMP project has households and 25 105 rural households (78.6%)
found that the per capita fuelwood consumption use electricity as the main fuel for lighting and
in the residential sector is about 0.78 tonne per cooking (Census 2005). This shows that one of
annum, accounting for 68% of the total fuelwood the objectives of rural electrification – to reduce
consumption in the country. fuelwood consumption – has been achieved
Cooking and space heating are many times successfully. Studies have also shown that there
carried out by using same device, which is is about 25% reduction in fuelwood consumption
commonly called bukhari. It uses fuelwood as fuel. in electrified households in rural areas.
In urban areas, special types of bukharis are used Cookers and water boilers (or electric kettles)
for space heating and water heating. are the major cooking equipment used for cooking
Fuelwood consumption, by Dzongkhag, is in these households. Besides, these electrified
presented in Table 2. households use electric heaters, refrigerators,
The table shows that Dzongkhags like washing machines, and infotainment gadgets like
Trashigang, Mongar, S’Jongkhar, Wangdue and TV, music players, and computers. The IEMMP
Dagana, Samtse, and Chukha together account survey has come up with the fact that electricity
for about 50% of the fuelwood consumed in the is mainly consumed for cooking, space heating,
residential sector. These areas can be targeted and water heating applications in the colder areas.
for implementing special programmes meant to Electric heaters used for space heating vary in type
reduce fuelwood consumption. and quality.
Electricity Kerosene
In electrified areas, electricity is the preferred Kerosene is the third most preferred fuel in
fuel for cooking, lighting, and space heating the residential sector in Bhutan, after fuelwood
applications. and electricity. In 2005, the residential sector
It is interesting to note that of the 72 063 consumed 12 545 kilolitres of kerosene (50%
electrified households in Bhutan, 31 510 urban of the total kerosene used in the country).

Table 2
FUELWOOD CONSUMPTION (TONNES), BY DZONGKHAG
Rural Urban Total
Dzongkhag Cooking Space Fodder Lighting Total Cooking Space Fodder Lighting Total Cooking Space Fodder Lighting Total
heating cooking heating cooking heating cooking
Bumthang 7 541 2 255 2 800 0 12 596 801 2 454 0 0 3 255 8 342 4 709 2 800 0 15 851
Chukha 20 595 4 184 10 186 0 23 965 1 896 491 0 0 2 387 22 491 4 675 10 186 0 37 352
Dagana 26 284 0 9 445 0 35 729 155 114 0 0 269 26 739 114 3 445 0 35 998
Gasa 3 955 312 2 315 0 6 582 0 0 0 0 0 3 955 312 2 315 0 6 582
Haa 4 225 5 908 4 938 0 15 071 142 1 092 0 0 1 233 4 367 7 000 4 938 0 16 304
Lhuentse 12 430 0 5 904 0 18 335 63 324 0 0 387 12 494 324 5 904 0 18 722
Mongar 34 743 0 8 010 0 42 753 0 0 0 0 0 34 742 0 8 010 0 42 753
Paro 10 794 1 389 17 033 0 29 216 27 883 0 0 910 10 821 2 272 17 033 0 30 126
PemaGatsgel 12 252 0 3 105 0 15 357 0 0 0 0 0 12 252 0 3 105 0 15 357
Punakha 9 439 0 3 886 0 13 324 0 0 0 0 0 9 439 0 3 886 0 13 324
Samdrup Jongkhar 28 907 0 13 425 0 42 332 0 0 0 0 0 28 907 0 13 425 0 42 332
Samtse 26 405 0 8 895 0 35 300 0 0 0 0 0 36 405 0 8 895 0 35 300
Sarpang 21 252 0 8 027 0 29 278 0 0 0 0 0 21 252 0 8 027 0 29 278
Thimphu 6 439 469 8 331 0 15 240 1 623 6 292 0 0 7 915 8 062 6 761 8 331 0 23 154
Trashigang 39 665 30 13 017 0 52 711 267 1 697 0 0 1 964 39 932 1 726 13 017 0 54 675
Trashi Yangtse 15 543 182 3 987 0 19 712 208 175 0 0 384 15 751 357 3 987 0 20 096
Trongsa 9 186 0 2 862 0 12 048 131 279 0 0 319 19 209 334 14 479 0 34 022
Tsirang 19 150 74 14 479 0 33 702 60 260 0 0 319 19 209 334 14 479 0 34 022
Wangdue 20 157 7 567 8 929 0 36 652 0 0 0 0 0 20 157 7 567 8 929 0 36 652
Zhemgang 14 507 230 6 187 0 20 923 160 413 0 0 573 14 667 643 6 183 0 21 497
Total 343 469 22 600 155 760 0 521 829 5 533 14 472 0 0 20 006 349 003 37 072 155 760 0 541 834
INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

ENERGY SECTOR – AN OVERVIEW
9
2
CHAPTER
CHAPTER
According to Census 2005, about 45 068 rural

Table 3
households (36% of the total households and
THERMAL EFFICIENCY OF SELECT COOKING DEVICES THAT
51.3% of rural households) and 996 urban
USE DIFFERENT FUELS
households (2.8% of the urban households) still
use kerosene as the main fuel for lighting. The total Fuel/stove Device Efficiency (%)
number of households that use kerosene as the Electricity Rice cooker 78–94
main fuel for cooking is 11 342. Use of kerosene Biogas Biogas stove 55
for space heating is not very common, although Liquefied petroleum gas (LPG) LPG stove 60
in urban areas of Thimphu, space heaters based Kerosene Wick stove 36
on kerosene are available. Because of the adverse Pressure stove 40
health impacts of using kerosene for lighting, Biomass Traditional stove 8–18
low-cost wick lamps that are commonly used
Biomass Improved stove 20–35
for lighting need to be discouraged. Accordingly,
Source: Bhutan Energy Data Directory, 2005
measures are proposed to reduce the use of
kerosene for lighting.
Table 4
Liquefied petroleum gas USEFUL ENERGY DELIVERED USING DIFFERENT FUELS
LPG is mostly used for cooking in the urban areas Fuel Calorific value End-use Useful energy
of the country. In 2005, total LPG consumption (kcal/kg) device delivered
efficiency (%) (kcal)
in the residential sector was 3522 tonnes, of which
2613 tonnes (74%) was consumed in the urban Fuelwood 3500 12 420
sector. Electricity 860 85 731
LPG is supplied to Bhutan at concessional Liquefied 11 000 55 6050
rates. However, the selling price is dependent petroleum gas
on transport costs, and hence, landed costs are
substantially higher in rural areas. Moreover,
often users have to carry LPG cylinders manually of fuelwood, whereas 1 kg of LPG replaces 14.7 kg
due to the non-connectivity by road/lack of road of fuelwood.
infrastructure, and this is one of the reasons for the
less penetration of LPG in rural areas. It was found Industrial sector
that LPG is the least preferred fuel in rural houses The development path followed by Bhutan has led
that are not accessible by motorable roads. to a spurt in industrial activities in the past few
Use of LPG for applications other than cooking decades.Though the industrial sector in Bhutan has
was not noticed during the survey. LPG cook many small- and medium-scale industries, energy
stoves used in the country vary widely in make consumption in the industrial sector is dominated
and quality. by few large energy-intensive industries. The
industrial sector is driven by the fact that Bhutan
End-use devices efficiencies has lowest electricity tariffs in the region, thus,
Efficiencies of the end-use devices used as cooking making electricity-intensive industries profitable.
appliances vary significantly, as shown in Table 3. Most industries are located in the southern
These impact the amount of fuel used for getting Dzongkhag of Chukha, Samtse, Sarpang, and
similar amount of useful energy. Thimphu, which are closer to the Indian border
As shown in Table 4, useful energy delivered and also to Chukha Hydropower Plant.
using different fuels, after considering the end-use Three large industries, namely, Bhutan Calcium
device efficiency, also varies considerably. and Carbide Ltd, Penden Cement Authority
It can be seen that to get the same amount of Ltd, and Bhutan Ferro Alloys Ltd, are the major
useful energy, 1 kWh of electricity replaces 1.74 kg consumers of energy in Bhutan. These industries

CHAPTER
are also the major consumers of electricity in the

Table 6
country. In 2005, they together consumed 334 MU
SECTORAL SHARE OF GROSS DOMESTIC PRODUCT
of electricity, which is 81% of the total electricity
(% PER YEAR)
consumed in the industrial sector.
The industrial sector consumes 25.5% of Year Agriculture Industry Services
the total energy and is the largest consumer of 1980 56.7 12.2 31.1
electricity in the country. In 2005, the sector 2000 32.5 32.4 35.1
consumed 410 MU of electricity (about 64.7% 2001 49.4 5.0 45.6
of the total electricity consumed in the country). 2002 31.7 34.9 33.4
Other fuels that are used in the sector include coal,
2003 31.0 35.1 33.9
furnace oil, kerosene, LDO, and fuelwood.
Source Asian Development Outlook, 2005
Growth rate of value added in the industry (%
per year) from 1994 to 2004 is given in Table 5.
Sectoral share of GDP (% per year) in various of diesel and 13 879 kilolitres of petrol. About
sectors is given in Table 6. 1145 kilolitres of the aviation turbine fuel was
consumed during the same period. The country
Transport sector is fully dependent on transport fuel imports, and
The transport sector in Bhutan is characterized the imports are showing a rapid upward trend. The
by the dominance of road and air transport. import of petrol has gone up more than three times
Being a hilly country, rivers generally do not run over the period 1995–2005, while that of diesel has
very deep, and hence, the use of waterways for risen 2.5 times during the same period.
transport is negligible. In some places, ropeways Besides the rising cost of petrol and diesel,
are being used for the transportation of logs and complete dependence of the transport sector on
other materials. these imported fuels is an area of concern for
future, from the energy security perspective.
Motorization trends in Bhutan
Bhutan has experienced high levels of motorization Commercial and institutional sector
in the recent years. The motor vehicle fleet has Energy consumption by the commercial and
more than doubled in the last decade (1997–2007), institutional sector, consisting of commercial
with the number of registered motor vehicles rising establishments, such as shops and hotels, and
from 13 584 at the end of 1997 to 30 733 vehicles institutional establishments, such as monasteries,
by the end of March 2006. Thus, the number of government offices, schools, hospitals, and so
registered motor vehicles has exhibited an average on, accounts for 10.2% of the total energy
annual growth rate of 10.4% during this period. consumption. The sector is also an important
Energy consumption in the transport sector electricity consuming sector, consuming 119
accounts for 13.7% of the total energy consumption. MU in 2005, which is about 18.75% of the total
The energy is used in the transport sector for electricity consumption in the country. Besides
mainly road transport, which uses diesel and petrol. electricity, fuelwood, along with LPG and kerosene,
In 2005, the sector used about 48 703 kilolitres is also widely used.
Table 5
GROWTH RATE OF VALUE ADDED IN THE INDUSTRY
Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Growth rate 13.9 17.0 5.8 3.5 8.5 12.2 3.9 13.7 17.9 7.3 9.6
(% per year)
Source Asian Development Outlook, 2005

CHAPTER
Tourism industry them. Export of fruits and potatoes has shown an

Tourism is Bhutan’s third largest contributor to increasing trend in the recent years.
economy, after electricity and industry. This sector
Energy use in the agriculture sector
is showing rapid growth, with substantial increase
The agriculture sector is mainly dependent on
in the number of tourists in the past few years.
human and animal power. However, with recent
Arrival of tourists in Bhutan, by year, is shown in
developments, the sector is increasingly using
Figure 7.
state-of-the-art energy resources.
Electricity in the agriculture sector is mainly
used for pumping. The sector consumed about 0.8
MU of electricity in 2005, which is about 0.13% of
the total electricity consumption of the country in
2005. Other fuels used in the sector include diesel
(about 544 kilolitres) for power tillers, which are
multipurpose devices for farmers. Subsidized power
tillers are supplied by the Ministry of Agriculture.
However, power tillers are predominantly used in
few Dzongkhags only (Table 7).
Cardamom drying, oil extraction, and rice milling
FIGURE 7 ANNUAL ARRIVALS IN BHUTAN are some of the other activities that use energy
Source DoT (2005) resources for post-harvest processing. Overall,
commercial and modern energy resources do not
Agriculture sector find much use in the agriculture sector compared
to other sectors. Their use is likely to remain low in
Traditionally, Bhutanese agriculture comprised
future too, as agriculture is constrained by natural
subsistence farming, and rural households were
factors such as mountainous terrain. With only 7%
self-sufficient in food production. Bhutan’s
of the land under cultivation and rising demand
agricultural sector, which employs about 79%
for land for other uses such as industries and urban
of the population but has only about 7% of the
settlements, agriculture is likely to continue to be
land under cultivation, is driven substantially by
at the same level as today.
the non-commercial energy in the form of human
labour and animal power.
Energy situation in Bhutan in the regional
Agriculture activities are constrained in the
context
region, which is mostly mountainous. Because
of the mountainous terrain, it is difficult to The per capita energy and electricity supply
have large farmlands and mechanized farming. are still way below the world average (Table 8).
Besides, large tracts of land are under forests and However, in a regional context, Bhutan emerges as
reserved parks. Lack of access to market, absence the leading country in South Asia, both in terms
of approach roads from farms to marketplace, of total primary energy supply as well as electricity
and lack of storage and post-harvest processing supply per capita per year.
facilities are also some of the constraints faced SUMMARY OF MAJOR ISSUES FOR INTEGRATED
by the agriculture sector. Recent years have seen ENERGY PLANNING
improvement in these facilities, and agriculture is
# Heavy dependence of the residential sector on
slowly shifting towards growing horticulture crops
fuelwood would be a cause of concern in the
and cultivating cash crops like potato, rice, and
years to come. Experience shows that because of
so on. Cold storage facilities have been created
electrification, fuelwood consumption reduces
at Paro (close to airport) and Phuentsholing
by about 30%–35%.
for storing apples and oranges before exporting

CHAPTER
Table 7
NUMBER OF FARM MACHINERY SUPPLIED TO VARIOUS DZONGKHAGS (FROM 1983 TO MARCH 2005)
Dzongkhag Tractor Power Power Water Power Paddy Power Total
tillers chain saw pump sprayers transplanter thresher
Thimphu 49 201 41 54 57 2 26 430
Paro 66 436 28 83 32 34 82 761
Haa 2 58 1 0 0 0 7 68
Chukha 8 23 45 3 0 0 0 79
Samtse 4 24 6 1 1 0 1 37
Punakha 5 226 2 33 0 8 29 303
Gasa 0 24 0 0 0 0 0 24
Wangdue 14 209 23 27 5 4 17 299
Tsirang 0 37 0 3 2 0 6 48
Dagana 0 22 0 2 0 0 0 24
Bumthang 21 134 12 0 2 1 11 181
Trongsa 5 95 4 0 0 0 0 104
Zhemgang 1 30 0 0 0 0 0 31
Sarpang 6 88 1 1 2 0 5 103
Lhuntse 1 10 3 2 0 0 0 16
Mongar 6 23 7 2 0 0 0 38
Trashigang 12 29 13 4 1 2 1 62
Yangtse 4 10 1 0 0 1 0 16
Peragatshel 4 31 0 1 0 1 1 38
S/Jongkhar 5 7 8 0 0 0 3 23
Total 213 1717 195 216 102 53 189 2685
# The pattern of energy consumption by the

Table 8
industrial sector would play a major role in
COMPARISON OF PER CAPITA ENERGY AND ELECTRICITY
energy management.
SUPPLY
# Rapidly growing transport sector is entirely
Per capita energy Per capita electricity dependent on imported fossil fuels, and fuel
supply (TOE/capita/ supply (kWh/capita/
consumption in this sector is a cause for concern
year) year)
mainly due to its impact on balance of trade and
Bangladesh 0.16 140
likely increase in pollution in the urban area.
Bhutan 0.63 1174 # The commercial sector is showing substantial
India 0.53 457 growth potential and is the third largest
Myanmar 0.28 104 consumer of energy.
Nepal 0.34 69 # The agriculture sector consumes relatively less
Pakistan 0.49 425 commercial energy.
Sri Lanka 0.49 345
World 1.77 2516
Source IEA (2006)

CHAPTER 3
Energy scenarios for Bhutan 2020
MODELLING DEMAND–SUPPLY SCENARIOS to policy analysis, without having to resort to more

Energy is one of the major drivers of economic complex models.
growth. Bhutan, one of the smallest economies LEAP model projections have been made under
based on agriculture and forestry, is expected to four different scenarios for electricity, biomass,
experience rapid economic growth and development coal, liquefied petroleum gas (LPG), petrol, diesel,
in future, and the country’s requirements for energy kerosene, and aviation turbine fuel (ATF).
and supporting infrastructure would increase as DEFINING SCENARIOS
well. In view of this, an integrated assessment
Energy scenarios are frameworks for analysing
of energy demand was carried out, along with
future energy perspectives, including various
determining the possible energy pathways and
combinations of technology options and
their impacts on infrastructure requirements.
interventions. Scenarios help to visualize how
DEMAND ANALYSIS USING LEAP the future is going to unfold under different
The energy demand projections have been carried assumptions. They are particularly helpful in
out for a period up to 2020 for the residential, investigating alternative future developments and
industrial, commercial and institutional, and their implications. Scenarios can be based on
transport sectors. The Long-range Energy assumptions that are compatible with sustainable
Alternatives Planning model, or LEAP, is a development goals like improved efficiencies,
scenario-based energy–environment modelling adoption of advanced energy supply technologies
tool. Its scenarios are based on comprehensive with low environmental impacts, and efficient use
accounting of how energy is consumed, converted, of natural resources. To have a look at the relative
and produced in a given region or economy under position of an economy, scenarios can also be
a range of alternative assumptions on population, based on different economic growth trajectories.
economic development, technology, and price, In the context of building scenarios for projecting
among other factors. LEAP is useful in projecting energy demand for Bhutan, the following four
energy supply and demand situations in order to scenarios have been considered.
provide a glimpse of future patterns, identifying # Business-as-usual scenario, or BAU
potential problems, and assessing the likely impacts # Energy-efficient scenario, or EE
of energy policies. LEAP can assist in examining a # High growth scenario, or HIG
wide variety of projects, programmes, technologies, # High growth coupled with energy efficiency, or
and other energy initiatives, and arriving at HIGEE

strategies that best address environmental and
energy problems. The main advantages of LEAP The subsequent sections briefly define the broad
are its flexibility and ease-of-use, which allow characteristics of the four scenarios. Detailed
decision-makers to move rapidly from policy ideas explanation of the assumptions for different sectors
is outlined in the later part of the analysis.

CHAPTER
3 ENERGY SCEN ARIOS FOR BHUTAN 2020
Business-as-usual scenario ENERGY DEMAND PROJECTIONS, BY SECTOR

In the absence of any technological or policy Residential sector
intervention, this scenario is termed as the The energy demand projections for the residential
most likely path of development. This scenario sector under different scenarios have been made
incorporates existing government plans and policies. for urban and rural households that use four
In the BAU scenario, an average real gross domestic different categories of fuel: (1) electricity, (2)
product (GDP) growth rate of 7.7% (uniform over LPG, (3) fuelwood, and (4) kerosene.
the entire modelling frame, that is, between 2005 While Bhutan is aiming at 100% rural
and 2020) has been considered. Sectoral variables electrification by 2013, till electricity extends to
grow with historical trends, and the specific energy all rural areas, lighting, cooking, and heating will
consumption of different sectoral activities remains continue to be primarily dependent on fuelwood.
at its current levels (2005). The distribution of households by fuel type is
presented in Table 1.
Energy-efficient scenario
This scenario takes into account the specific
Table 1
energy efficiency measures spanning across
PERCENTAGE OF HOUSEHOLDS USING DIFFERENT FUELS
all sectors. These measures are expected to be
(2004/05)
adopted uniformly across all sectors from 2008/09.
Efficiency improvements in existing devices and Percentage Percentage Percentage
of urban of rural to total
shifts to modern efficient technologies are the basic
households households households
characteristics of this scenario.The sectoral variables
Electricity
are assumed to grow as per the BAU rates.
Cooking 82.2 28.5 44.89
High growth scenario Lighting 96.4 40.0 57.2
This scenario assumes a high GDP growth Liquefied petroleum gas
rate of 10% (uniform over the modelling time Cooking 77.1 20.3 37.56
frame, 2005–20) compared to the GDP growth Fuelwood
rate of 7.7% assumed in the BAU scenario. The Cooking + space 9.90 75.28 54.72
HIG scenario is characterized by a shift of the heating
economy towards the growth led by the industrial Kerosene
and service sector, with the latter dominating in
Cooking 9.54 8.75 8.90
terms of its contribution to GDP. Specific energy
Lighting 2.6 51.3 36.52
consumption figures for different sectors remain
at the BAU levels, wherein the total energy
consumption for different fuels under different The pattern of using fuels is not same in rural
sectors is much higher due to higher growth of and urban areas. Urban households depend less
the sectoral variables. on kerosene and fuelwood due to relatively high
usage of electricity and LPG. In rural areas, a
High growth coupled with energy efficiency considerable proportion of the households still
scenario depends on traditional fuels due to non/less
availability of modern cleaner fuels.
Finally, the HIGEE scenario combines a high
The total consumption of these fuels, by and
GDP growth rate of 10% with high energy
large, depends on the growth rate of the sectoral
efficiency measures. This scenario is representative
variables, the intensity of their use, the future
of the most optimistic scenario in terms of both
penetration rate of devices/modern fuels, and
economic growth and technological interventions,
their usage pattern among different categories of
steering the economy towards the most energy-
households. Table 2 gives the assumptions under
efficient path.

CHAPTER
ENERGY SCEN ARIOS FOR BHUTAN 2020 3
various scenarios for determining the major projected population up to 2020, based on the
sectoral variables. above details, is given in Annexure 3.1. Rural
The energy demand projection for the domestic electrification, which at present stands at 40%,
sector is confined to regular households only, is assumed to take place uniformly across all the
although the census divides the households scenarios, according to the plans laid down in the
into regular, institutional, and transient. This is Rural Electrification Master Plan (REMP); urban
due to the fact that the household break-up by and rural electrification is expected to reach the
activities and fuel type is available only for regular 100% level by the end of the Tenth Five-year Plan
households. According to Population and Housing (the current target is also to achieve 100% rural
Census of Bhutan 2005, a total of 126 115 regular electrification by the end of the Tenth Five-year
households have been recorded in Bhutan. They Plan). As far as the distribution of households in
account for 91% of the total resident population rural and urban areas is concerned, Census 2005
(634 982) and 86.3% of the total population reports that 30.4% of the total population lives in
(resident plus floating) of Bhutan. The average urban areas and the rest 69.6% lives in rural areas.
weighted household size is estimated to be 4.6. Given the historical trend of urban migration
One year before the census, the natural growth (prior to 2000), Vision 2020 predicts that urban
rate of population was found to be 1.3%. This population will equal rural population by the end
data is assumed to remain constant over the of 2020, which also holds true for the BAU and
modelling time frame under all scenarios. The EE scenarios. However, in the other two scenarios
Table 2
ASSUMPTIONS FOR SECTORAL VARIABLES FOR ESTIMATING ENERGY DEMAND IN RESIDENTIAL SECTOR
Variables BAU scenario EE scenario HIG scenario HIGEE scenario
Analysis based Yes Yes Yes Yes
on regular
resident
households
Annual 1.3% (Census 2005) 1.3% (Census 2005) 1.3% (Census 2005) 1.3% (census 2005)
population
growth rate
for regular
resident
households
Household size
Rural 4.7 4.7 4.7 4.7
Urban 4.3 4.3 4.3 4.3
Urban–rural Urban population = rural Urban population = rural Urban population = 65% Urban population = 65%
population population by 2020 (Vision population by 2020 (Vision of total regular resident of total regular resident
ratio 2020) 2020) population (based on recent population (based on recent
migration trends during migration trends during
2000–05) 2000–05)
Rural According to Accelerated According to Accelerated According to Accelerated According to Accelerated
electrification Rural Electrification Rural Electrification Rural Electrification Rural Electrification
Programme – end of the Tenth Programme – end of the Tenth Programme – end of the Tenth Programme – end of the Tenth
Five-year Plan Five-year Plan Five-year Plan Five-year Plan
Urban End of the Tenth Five-year End of the Tenth Five-year End of the Tenth Five-year End of the Tenth Five-year
electrification Plan Plan Plan Plan
BAU – business-as-usual; EE – energy-efficient; HIG – high growth scenario; HIGEE – high growth coupled with energy efficiency

CHAPTER
(HIG and HIGEE), the recent migration pattern fuels could well lead to a 100% penetration of LPG
has been taken into account (2000–05 and then in rural and urban households in the HIG scenario.
annualized), which shows that by 2020, about 65% However, in the baseline and EE scenarios, it is
of the total population will live in urban areas. assumed that by 2020, penetration would reach a
The pattern and type of fuel usage are not maximum of 88.5%, based on a simple average of
uniform across different categories of households the existing and the HIG percentages. Kerosene
and are found to vary significantly. The usage is consumption in the HIG and HIGEE scenarios is
largely governed by the availability and paying assumed to come down to 0% because of faster
capacities of the households.With economic growth switching to cleaner fuels, with 4.65% being the
and access to cleaner fuels, the usage pattern ‘end-of-model’ period value under the BAU and
is assumed to change significantly, especially in EE scenarios (simple average). As evident from
the HIG scenario. Table 3 shows how the usage Table 3, fuelwood is being used by 10% of the
pattern is expected to change across households urban households. With access to modern fuels,
and scenarios. this dependence is assumed to come down to 5%
With complete electrification envisaged for rural by 2020 under the BAU and EE scenarios and to
and urban areas by 2013, almost all the households 1% in the extreme scenarios.
will be using electricity. According to TERI survey, Fuelwood and kerosene, which at present
electricity in urban areas is used for lighting, are consumed by more than 50% of the regular
cooking, space heating, washing, refrigeration, households, are later to be replaced by electricity
and for other infotainment devices like TV and and LPG. Kerosene usage will experience a steep
radio. On the other hand, in rural households, fall in the HIG scenario, where the percentage
the usage is confined to lighting, cooking, and for usage will come down to 10% by 2020 as against
running television and radios. The usages of these 51% in 2005. Fuelwood usage will drop to 30% in
devices across economies by the rural and urban the HIG scenario as against 40% in the BAU and
households have been obtained from the Bhutan EE scenarios. The use of LPG, which is at present
Census Report. used by only 20.3% of the households, is assumed
Improvement in road conditions, increased per to reach 35% in the BAU and EE scenarios and
capita income, and the need to switch to cleaner 50% in the HIG and HIGEE scenarios. The energy
Table 3
FUEL USE PATTERN, BY RURAL AND URBAN HOUSEHOLDS (%)
BAU EE HIG HIGEE
2005 2020 2005 2020 2005 2020 2005 2020
Urban
Electricity 96.4 100 96.4 100 96.4 100 96.4 100
Liquefied 77.1 88.5 77.1 88.55 77.1 100 77.1 100
petroleum
gas (LPG)
Fuelwood 10 5.5 10 5.5 10 1 10 1
Kerosene 9.3 4.65 9.3 4.65 9.3 0 9.3 0
Rural
Electricity 40.1 100 40.1 100 40.1 100 40.1 100
LPG 20.3 35 20.3 35 20.3 50 20.3 50
Fuelwood 75 40 75 40 75 30 75 30
Kerosene 51 30.5 51 30.5 51 10 51 10

CHAPTER
intensities (consumption of fuels per household) Energy demand for the residential sector
for the above-mentioned fuels by end-use devices The residential sector consumes about 49% of
and scenarios are presented in Table 4. the total energy consumed in the economy, the
largest amongst all sectoral shares. The relatively
high energy consumption is on account of the
Table 4
ENERGY INTENSITIES BY END USE AND FUEL TYPE
BAU EEa Percentage Source
improvement
Urban households
Electricity Lighting (kWh/hh/ 324 86.4 73 <http://www.eartheasy.com/live_energyeff_lighting.
annum) htm>
Cooking and heating 1256 1141.07 9 <http://www.clasponline.org/productsummary.
(kWh/hh/annum) php?country=China&product=Rice%20Cooker>
Washing machine (kWh/ 150 150 0
hh/annum)b
Refrigerators (kWh/hh/ 416 416 0
annum)b
TV (kWh/hh/annum)b 152 152 0
VCD/DVD/tapes (kWh/ 21.66 21.66 0
hh/annum)b
LPG Cooking (kg/hh/annum) 88.3 84.09 5 <http://www.mahaurja.com/pdf/TipDS.pdf>
Fuelwood Cooking + space heating 4336 2955 32 <http://web.mit.edu/d-lab/DlabIII06/study-stove-
(kg/hh/annum) shastri.pdf>
Kerosene Cooking (litre/hh/ 22 22 0
annum)
Lighting (litre/hh/ 119 119 0
annum)
Rural households
Electricity Lighting (kWh/hh/ 341 90.33 74 http://www.eartheasy.com/live_energyeff_lighting.
annum) htm
Cooking and others 533 510.34 4 http://www.clasponline.org/productsummary.
(kWh/hh/annum) php?country=China&product=Rice%20Cooker
TV (kWh/hh/annum)b 152 152 0
VCD/DVD/tapes (kWh/ 21.66 21.66 0
hh/annum)b
LPG Cooking (kg/hh/annum) 41 39 5 http://www.mahaurja.com/pdf/TipDS.pdf
Fuelwood Cooking + space heating 9359 6720 by 41 http://www.ias.ac.in/currsci/oct102004/926.pdf
+ fodder cooking (kg/hh/ 2008 and
annum) 5519 by
2020
Kerosene Cooking (L/hh/annum) 146 146 0
Lighting (L/hh/annum) 30 30 0
a
Efficiency applicable from 2008, b DoE, Bhutan; LPG – liquefied petroleum gas
Source TERI primary survey (IEMMP project)

CHAPTER
significant dependence of the sector on fuelwood.

Thousand tonne
Fuelwood share in the total energy basket in 500 490
2005 was 92%. The share of electricity was 4%, 450

400
while that for LPG and kerosene, it was close to
350
2.5% and 1.5%, respectively. The demand for 300 294
different types of fuels under four scenarios is 250

208
given in Figures 1–4. The focus of the proposed 200
150
150
sustainable development strategy would be on 100
106
reducing fuelwood share in the residential sector. 50

This can be achieved by the (1) introduction of 0
2005 2010 2015 2020
high efficiency cook stoves and (2) switching to Year
BAU EE HIG HIGEE
modern fuels like LPG, electricity, and renewable
energy like solar cooking, biogas-based cooking, FIGURE 2 FUELWOOD DEMAND
and home heating systems.
Energy demand in the residential sector, by Thousand tonne

10
9.1
8.8
fuel
Electricity 8
6.5
6.2
Demand for electricity during 2005 in the residential 6
sector was 80.2 million kWh and is expected to
4
reach 175 million kWh by 2020, under the BAU 2.9
scenario, whereas in the HIG scenario, the demand 2
can be as high as 253 million kWh. Energy-saving
0
measures can help reduce electricity consumption 2005 2010 2015 2020
by 27%. Year
BAU EE HIG HIGEE
Fuelwood FIGURE 3 LPG DEMAND
The present demand for fuelwood is 490 000
tonnes, which is highly skewed towards rural
Thousand kilolitre
households that account for 95% of the total 7.00 6.40
residential usage. Fuel switching is expected, and 6.00
as a result, fuelwood usage will come down to 5.00 3.89
294 000 tonnes in the BAU scenario. 4.00
3.00
2.00
0.64
1.00
0.00
2005 2010 2015 2020
Year
BAU EE HIG HIGEE
FIGURE 4 KEROSENE DEMAND
In the HIG scenario, due to the faster switching

to cleaner fuels like LPG and electricity, the
consumption could come down to 150 000
tonnes. Demand side management, particularly in
household cooking, can help achieve an efficiency
FIGURE 1 ELECTRICITY DEMAND level of 30%.

CHAPTER
Liquefied petroleum gas Recent data shows an increasing trend for private
The consumption of LPG is found to be on the sector industries. Private sector industries grew from
lower side compared to other fuels but is expected 15 489 in 2004 to 24 417 in 2006, an increase of
to increase by 2.4 times the present consumption 57% in two years. Notably, the large-scale industries
of 2900 tonnes. grew from 47 in 2004 to 72 in 2006. Substantial
In the HIG scenario, consumption could reach growth can be noticed in small-scale industries,
9000 tonnes. Achievable efficiency improvement is which ranged from 628 in 2004 to 1660 in 2006,
5%, as the devices in use do not have a scope for logging more than 160% growth in two years.
improvement, which can lead to the reduction in
the consumption, with the figures in the EE and Table 5
HIGEE scenarios being 6200 and 8800 tonnes,
GROWTH IN INDUSTRIES UNDER THREE CATEGORIES
respectively.
Year Private Joint ventures Public
Kerosene 1999 5 678 5 33

Kerosene consumption is dominant in rural 2000 8 959 23 43
households vis-à-vis urban households, with the 2001 12 807 24 47
total kerosene consumption in 2005 being 6400 2002 13 833 24 47
kilolitres.
2003 14 627 15 50
With rural electrification, kerosene consumption
2004 15 489 15 50
is expected to come down to 3890 kiloliters in the
BAU and EE scenarios and to 640 kilolitres in the 2005 17 181 15 61
HIG and HIGEE scenarios. 2006 24 417 11 77
Source Bhutan Statistical Yearbook, 2007
Industrial sector
Till 1998, the industrial sector in Bhutan Within the industrial sector, the manufacturing and
played a limited role in the country’s economic mining industries play a crucial role in determining
development. The sectoral (secondary sector) the present and future energy demand. According to
GDP to country’s total GDP was close to 30% the MoEA (Ministry of Economic Affairs) estimates
(between 1990 and 1998). Thereafter, the sectoral for 2004, a total of 874 units existed under the
contribution improved, and between 1999 and mining and manufacturing industries, of which 858
2002, the sectoral share increased from 36.5% were completely under the private sector. The rest
to 38%. However, after 2002, it experienced a 16 were under joint and public sector undertakings.
declining trend, reaching as low as 35% in 2004. Table 6 shows the growth in the number of units
In Bhutan, industries are broadly classified under under the production and manufacturing category
three categories: (1) private, (2) joint ventures, and (between 2002 and 2004).
(3) public. The number of private sector units has
grown considerably between 2000 and 2004. From Table 6
5678 in 1999, the private sector units increased to GROWTH IN THE NUMBER OF PRODUCTION AND
15 489 by 2004. The joint and public sectors did MANUFACTURING UNITS
not experience much of a change in the number
Year Private Joint Public
of establishments during the said period. Joint
2002 570 6 10
sectors increased from 5 to 15 units, with closing
down of some of the existing ones, while the public 2003 712 6 12
sector grew marginally at 17 units between 1999 2004 858 5 11
and 2004. Table 5 shows the trend in the number 2005 967 5 13
of industries under the three categories. 2006 1113 5 15
Source Statistical Yearbook of Bhutan, 2007

CHAPTER
Within the industrial sector, the construction by 22 medium voltage industries consuming
activities have been the major contributor to growth 8%, and 122 low voltage industries consuming
and contributed between 13% and 18% of the roughly about 3% of the total electricity. As far as
GDP. The manufacturing sector has accounted for the energy projection for the sector is concerned,
around 8%–9% of the GDP, while the electricity, analysis has been done separately for both energy-
water, and gas sectors have been close to 10% of intensive and non-energy-intensive industries.
the GDP (Figure 5). Given the above complexities, the criterion
used to identify energy-intensive industries is
the share of fuel cost to total cost of production.
Based on the figures published in the Census of
Manufacturing Industries 2001, the average share
of energy expenditure to total was estimated at
the sectoral level. The relative position of the
industries (whether energy intensive or not) is
classified based on the fact whether the share of
the cost of fuel to total cost of production exceeds
the economy’s average. Data related to fuel and
total costs was not available for the iron and steel
plant. As a result, the data for the same has been
assumed to be similar to that of the Indian industry
for 2000. The value obtained for the industry was
found to be 0.17, which is above the average value
calculated for Bhutan (0.055). Table 7 shows the
FIGURE 5 INDUSTRIAL GDP AS A PERCENTAGE SHARE TO list of industries, which can be categorized as
TOTAL GDP energy intensive.
Source Statistical yearbook of Bhutan (2005), National Statistics
Bureau, RGoB, Bhutan
Table 7
Categorization of industries for energy INDUSTRIES UNDER ENERGY-INTENSIVE CATEGORY
projections Industries Ratio of fuel purchased/total cost of
In Bhutan, the Bhutan Power Corporation (BPC) production
categorizes electricity consumers under the three Cement 0.2828
following heads. Dolomite crushing 0.2682
1 Low voltage consumers (230 volts and
Gypsum mining 0.2568
415 volts)
Marble mining 0.2127
2 Medium voltage consumers (6.6 kV, 11 kV,
and 33 kV) Rice mill 0.2084
3 High voltage consumers (66 kV and above) Stone crushing 0.1841

Ferro alloys 0.1102
The low voltage consumers are mostly from the Salt iodization 0.1059
residential and commercial sectors and a number Candle factory 0.0988
of small-scale industries. Medium-scale and some
Nursery plantation 0.0892
small-scale industries come under the medium
Plaster of Paris 0.0890
voltage category. Finally, heavy, power-intensive
industries come under the high voltage category. Oil mill 0.0868
As per the records of the BPC (2005), altogether Dolomite powder 0.0793
there are three high voltage industries, which Rosin and turpentine 0.0702
consume 56% of the total electricity, followed

CHAPTER
However, the detailed plant-level data could only the potential for energy conservation are discussed
be obtained for the following six major operating in detail.
units.
1 Bhutan Ferro Alloys Ltd, or BFAL Energy-intensive industries
2 Bhutan Calcium Carbide Ltd, or BCCL Of the six industries listed above, the first three are
3 Penden Cement Authority Ltd, or PCAL listed under the high voltage category consumers,
4 Druk Cement Company Ltd, or DCCL while the rest are under the medium voltage
5 Druk Iron and Steel Ltd, or DISL category. In 2005, these six industries consumed
6 Bhutan Steels Ltd, or BSL electricity equivalent to 377 million kWh (close to
90% of the total sectoral electricity consumption
The rest are classified under the category of non- of 420 million kWh and 62% of the country’s
energy-intensive industries. These industries are electricity consumption of 615 million kWh).
further classified as: (1) existing and (2) upcoming The energy-intensive industries indicated above
units. In the following sections, the existing are export oriented, with India as their major
energy consumption patterns (energy intensities), international market. The geographical pattern
technologies used in energy-intensive units, and of the sales of four energy-intensive industries is
presented in Table 8.
Table 8
SALES OF PRODUCTS OF POWER-INTENSIVE INDUSTRIES
Industry 1993 1996 1999 2002 2004
(million Nu) (million Nu) (million Nu) (million Nu) (million Nu)
BFAL
Exports to India 497.14 534.73 643.16 712.85
Exports to other countries 0 0 0 24.19
Sales within Bhutan 0 0 0 11.15
Total sales 497.14 534.73 643.16 748.19
PCAL
Exports to India 95.92 124.2 433.67 258.15 265.14
Exports to other countries 2.1 0.27 0 0 0
Sales within Bhutan 15.73 85.06 250.78 556.12 586.69
Total sales 113.75 209.53 684.45 814.27 851.83
BCCL
Exports to India 355.58 542.59 546.76 704.73 714.67
Exports to other countries 0.55 0 0 0 0
Sales within Bhutan 0.69 18.62 22.56 2.78 16.92
Total sales 356.82 561.21 569.32 707.51 731.59
DISL
Exports to India 26 802
Exports to other countries 0
Sales within Bhutan 0
Total sales 26 802
BFAL – Bhutan Ferro Alloys Ltd; BCCL – Bhutan Calcium Carbide Ltd; PCAL– Penden Cement Authority Ltd; DISL – Druk Iron and Steel Ltd
Source UNDP (2005); Bhutan Trade Statistics (2005)

CHAPTER
PCAL, the largest cement plant in Bhutan, caters come on stream between 2008 and 2009. Of these
to Bhutan, with 70% of its sales in the domestic 55 industries, nine industries fall under ferro-alloy
market due to the demand from under construction category, two under steel rolling, four under steel
hydropower project. This domestic demand is ingots, and one each is categorized under cement
likely to taper off in the coming years with the and magnesium metal. The production capacities
completion of the Tala Hydel Power Project. This of the existing energy-intensive industries and the
can, to some extent, affect the business of the plant, upcoming ones are indicated in Table 9.
and if no substantial demand is generated, the These industries mostly consume electricity as
plant has to depend on the market of neighbouring fuel in production. Significant coal usage is found
countries, especially Nepal, Bangladesh, and India. in cement plants. As far as the consumption of
Notwithstanding increasing liberalization of these petroleum products is concerned, industries are
economies, there is a possibility of having to cope found to consume high speed diesel (HSD),
with greater competition. For example, there were furnace oil (FO), and light diesel oil (LDO). Of
concerns that calcium carbide exports from China the total industrial consumption of HSD (10 120
were driving down the price of calcium carbide in kilolitres) in 2004, energy-intensive industries
India, thereby posing a threat to Bhutan’s calcium consumed 1000 kilolitres, approximately 10% of
carbide exports. This implies that the cement and the total industrial usage. A considerable amount
other industries have to improve their production of FO (93% of the total industrial use) is also
efficiency to remain competitive internationally. used. However, the usage of LDO is low compared
According to the list provided by the BPC, a total to total industrial usage, which is approximately
of 55 industries (Annexure 3.2) have been given 3%. Compared to these fuels, electricity is
license to operate in Bhutan and are expected to used extensively in these very industries.
Table 9
PRODUCTION OF EXISTING AND UPCOMING ENERGY-INTENSIVE UNITS
Industries BAU EE HIG HIGEE Comments
2005 2020 2005 2020 2005 2020 2005 2020
Bhutan Ferro 27 600 45 300 27 600 45 300 27 600 45 300 27 600 45 300 Increased production from
Alloys Ltd 2006, as reported
Bhutan Calcium 22 000 39 280 22 000 39 280 22 000 39 280 22 000 39 280 Increased production from
Carbide Ltd 2007, as reported in energy
audit
Penden Cement 272 075 285 600 272 285 600 272 075 285 600 272 285 600 Increased production from
075 075 2008, as reported
Druk Cement 23 725 23 725 23 725 23 725 23 725 23 725 23 725 23 725
Bhutan Steels 17 200 27 500 17 200 27 500 17 200 27 500 17 200 27 500 Increased production from
2006, as reported
Druk Iron and 29 200 36 000 29 200 36 000 29 200 36 000 29 200 36 000 Increased production from
Steel Plant 2006, as reported
Upcoming ferro- 0 87 200 0 87 200 0 87 200 0 87 200 Increased production from
alloys 2008, as reported
Upcoming steel 0 300 000 0 300 000 0 300 000 0 300 000 Increased production from
plants 2008, as reported
Cement 0 1 000 000 0 1 000 000 0 1 000 000 0 1 000 000 Increased production from
2009, as reported
Upcoming other 0 69 500 0 69 500 0 69 500 0 69 500 Increased production from
metal industries 2008, as reported

CHAPTER
Energy equivalent of petroleum products use

Million kWh
is 9000 tonnes of oil equivalent (TOE), while 3000
that of electricity is 33 000 TOE. The specific 2500
electricity consumption (electricity per tonne of
2000
finished output) for these industries is presented in
1500
Table 10.
1000
Energy demand for different fuels by energy- 500
intensive industries 0
2005 2010 2015 2020
As mentioned earlier, these energy-intensive Year
industries mostly consume electricity and coal. BAU EE HIG HIGEE
The demand for these inputs by energy-intensive
industries is presented in Figures 6 and 7. FIGURE 6 ELECTRICITY DEMAND IN ENERGY-INTENSIVE
INDUSTRIES
Electricity
The present total electricity consumption by
energy-intensive industries is 377 million kWh and million kWh) can fetch foreign revenue close to
is expected to reach 2192 million kWh by 2020 Nu 400 million approximately (Figure 6).
under the BAU scenario. Total electricity consumption by energy-intensive
Electricity saving potential is close to 10%, industries will go up to 2782 million kWh by 2020
which can lead to reduced consumption to the under the HIG scenario. This estimate is mainly
tune of 1994 million kWh. Going by the present based on the assumption that all types of new
export tariff, exports of saved electricity (@ 200 industries will be allowed. The saving potential
under this scenario is about 210 million kWh.
Table 10
SPECIFIC ELECTRICITY CONSUMPTION
Electricity consumption (kWh/tonne)
BAU EEa HIG HIGEEa
Bhutan Ferro Alloys Ltd 6824 6500 6824 6500 Efficiency value based on best application of Norwegian
technology in Indian market
Bhutan Calcium Carbide Ltd 4500 4375 4500 4375 Efficiency value based on energy audit of TERI
Penden Cement 184.1 88 184.1 88 Five-stage pre-heater pre-calcinator (National Council for
Cement and Building Materials [NCCBM])
Druk Cement 116 88 116 88 Five-stage pre-heater pre-calcinator (NCCBM)
Bhutan Steels 735 662 735 662 Based on 10% motor efficiency (Energy Handbook of TERI)
Druk Iron and Steel Plant 800 650 800 650 Based on efficiency improvement measures for electric arc
furnace (EAF)-based steel plants (LBNL)
Upcoming ferro-alloys 9000b 8500b 9000b 8500b Efficiency value based on best application of Norwegian
technology in Indian market
Upcoming steel plants 728b 650b 728b 650b Based on efficiency improvement measures for EAF-based
steel plants (LBNL)
Cement 157b 88b 157b 88b Five-stage pre-heater pre-calcinator (NCCBM)
b b b b
Upcoming other metal industries 4659 4659 4659 4659
a
Energy saving from 2008, b Weighted average

CHAPTER
Energy demand for different fuels by non-

Thousand tonne energy-intensive industries
600 586
In 2004, a total of 864 non-energy-intensive
500 457 industries existed in Bhutan. Because of the
400 unavailability of data for 2005, the annual average
growth rate (between 2000 and 2004) was used to
300
arrive at the 2005 figure on the number of non-
200 energy-intensive industries, the number of which
124
100 was pegged at 980. Under the baseline scenario,
0 the total number of industries is expected to reach
2005 2010 2015 2020
Year
the 3500 mark, on the assumption that the average
BAU EE HIG HIGEE annual growth rate remains at 9%, the annual
growth rate for these industries between 1990 and
FIGURE 7 DEMAND FOR COAL IN INDUSTRIES 2004. In the HIG scenario, the number of operating
industry is expected to reach 6300 by 2020, on the
Coal assumption that the average annual growth rate
Bhutan’s coal import in 2005 was estimated is 14%, which the industry experienced between
at 124 000 tonnes. Cement industry was the 2000 and 2004. Table 11 presents the assumptions
largest consumer, with consumption close to 58 for estimating the number of industries and the
000 tonnes. With the expansion in existing plant energy intensities (energy consumption per
capacities and setting up of new industries, the establishment) under four different scenarios.
demand is estimated to rise to 586 000 tonnes by In addition to normal growth of the existing
the end of 2020 (Figure 7). industries, 38 new licenses have also been awarded.
Demand side management can help reduce Majority of these industries are into agro-based
total coal consumption by 21%, that is, to 450 000 food products, silk fabric, and marble slabs.
tonnes approximately (Figure 7). Coal consumption Approximately, 26 MW power has been allocated,
under the HIG and HIGEE scenarios is assumed to and these units are expected to consume 65 million
be same as that under the BAU and EE scenarios, kWh per annum. Based on these figures, the average
since most of the additional proposed industries electricity consumption per unit is calculated to be
assumed to be established under the HIG scenario 1.7 million kWh. However, with proper efficiency
are not likely to use coal. measures, the consumption per unit can come
Table 11
ASSUMPTIONS FOR ENERGY DEMAND ESTIMATION FOR NON-ENERGY-INTENSIVE INDUSTRIES
BAU EE HIG HIGEE
Growth in establishments Grows annually @ of 9%, Grows annually @ 9%, based Grows annually @ 9% Grows annually @ 9%
based on annual average on annual average growth rate till 2007 and @ 14% till 2007 and @ 14%
growth rate between between 1990 and 2005 from 2008 from 2009
1990 and 2004
Electricity consumption per unit 43 877 39 489 (operational from 2008, 43 877 39 489 (from 2008
(kWh/establishment) with 10% efficiency in motors) with 10% efficiency in
motors)
Wood consumption (kg/ 38 189 30 551 (operational from 2008 38 189 30 551 (operational
establishment) assuming improvement in from 2008, assuming
efficiency of 20%) 20% improvement in
the efficiency)

CHAPTER
down to 1.5 million kWh. The projected electricity Wood

and wood demand is presented in Figures 8 At present, the total consumption of wood in
and 9. non-energy-intensive industries stands at 50 000
tonnes. Under the BAU scenario, total demand is
expected to reach 175 000 tonnes.
Million kWh
346
350 Demand side management can help achieve
312
an efficiency of 20% over baseline estimates,
300
reducing consumption to 140 000 tonnes and
223
250
250 000 tonnes in the EE and HIGEE scenarios,
200
200
respectively.
150
100 Commercial and institutional sector
50 43.0 The commercial and institutional sector has
0 been divided into four sub-sectors. These are as
2005 2010 2015 2020
Year follows.
BAU EE HIG HIGEE 1 Tourism
2 Commercial establishments (complexes,
FIGURE 8 ELECTRICITY DEMAND IN NON-ENERGY- including shops and restaurants)
INTENSIVE INDUSTRIES 3 Institutions
4 Bulk energy consumers like defence
Thousand tonne
In the subsequent sections, each sector, its growth,
320.60
350 the present and future energy intensities, and the

energy saving potential are discussed in detail.
256.49
300
Finally, energy demand for the sector, by fuel, is
250
178.97
presented.
200
143.16
150 Tourism
100 Tourism can have a substantial impact on
49.15
50 Bhutan’s economic sector. Furthermore, tourism
0 is the second largest foreign currency earner
2005 2010 2015 2020 and the most important contributor in terms of
Year
BAU EE HIG HIGEE free convertible currency (Strategy Document,
Department of Tourism, 2005). There has been a
FIGURE 9 DEMAND FOR WOOD IN NON-ENERGY- considerable growth in the inflow of international
INTENSIVE INDUSTRIES tourists in the recent past. The total international
arrival at the end of 1996 was estimated to be
Electricity 5137, and by 2006, the total inflow reached an all
The total electricity demand in 2005 was found to time high of 17 342. Figure 10 presents the tourist
be 43 million kWh, which is slated to rise sharply inflow in Bhutan between 1996 and 2005.
to 132 million kWh by 2010 and 223 MU by As per the latest records, Bhutan has more than
2020 under the BAU scenario, while in the HIG 175 hotels with more than 4000 beds. Average
scenario, the demand will be 346 MU by 2020. duration of stay per tourist in Bhutan has been
Energy saving potential for this sector is close to estimated to be approximately 10 days. As far as
10%, which can help reduce consumption by 20 the consumption of energy by these international
MU and 34 MU for the EE and HIGEE scenarios, tourists is concerned, the typical energy basket
respectively. includes electricity, LPG, and petroleum products.

CHAPTER
approximately 15%. Based on this estimate, the

total number of tourists visiting Bhutan by 2020
under the two scenarios is expected to be 110 900.
However, the influx rate has changed significantly
over the past five years. In 2001, the number of
foreign tourists visiting Bhutan was 6395, which
increased to 13 626 by 2005, marking an annual
average growth rate of 21%. Based on this growth
rate, the final figure for 2020 is 237 800. Each
tourist is estimated to consume about 261 kWh
of electricity and 6.21 kg of LPG. Use of energy-
efficient lighting and heating can reduce electricity
consumption by 30%. As a result, the electricity
FIGURE 10 INFLOW OF FOREIGN (PAID TOURISTS) IN intensity (electricity usage per tourist) can come
BHUTAN down to 183 kWh. As far as LPG consumption
is concerned, there may not be a far-reaching
Source Department of Tourism, RGoB (2005); Statistical
improvement, as even the existing LPG cook stoves
Yearbook of Bhutan (2007)
are highly energy efficient. However, some research
While the consumption of electricity and LPG is studies suggest that efficiency can be improved
discussed in this section, petroleum consumption further by regular cleaning of stoves, using materials
is dealt with separately in the section on the that have high heat conductivity for cooking, and so
transport sector. on. The efficiency attainable is 5% of the existing
Based on a rapid appraisal survey in three hotels stoves, thus resulting in the reduction of the per
in Thimphu, the electricity and LPG consumption capita consumption to 5.8 kg of LPG.
per capita was estimated. Table 12 describes in
detail the assumptions made in regard to the Commercial complexes, including hotels and
number of tourists expected to visit Bhutan, their restaurants
energy consumption under different scenarios, With increasing per capita disposable income
and the saving potential. and the government’s policy to promote tourism
The estimation of the number of tourists in Bhutan, the commercial sector as a whole has
between 2005 and 2020 under the BAU and EE experienced a healthy growth rate between 2000
scenarios is based on the annual average influx and 2005, which is pegged at 16%. The growth in
of foreign tourists in Bhutan between 1991 retail and hotel/restaurant industry is presented in
and 2004. The average influx rate obtained was Table 13.
Table 12
GROWTH IN TOURIST AND ENERGY INTENSITIES
BAU EE HIG HIGEE
2005 2020 2005 2020 2005 2020 2005 2020
Number of tourists 13 626 110 900 13 626 110 900 13 626 237 800 13 626 237 800
Per capita electricity 261 261 261 183 261 261 261 183
consumption (kWh)
Per capita liquefied 6.21 6.21 6.21 5.8 6.21 6.21 6.21 5.8
petroleum gas
consumption (kg)

CHAPTER
and wood have been derived from energy balance

Table 13
figures. Consumption of LPG has been calculated
GROWTH RATE IN THE COMMERCIAL SECTOR (%)
to be 141 kg per unit and that of fuelwood 1384
2000 2001 2002 2003 2004 2005 kg. Energy intensities under the EE and HIGEE
Wholesale 23.63 16.62 19.94 11.68 18.51 15 scenarios for these two fuels are 1107 kg and 1384
and retail kg, respectively.
trade
Hotels and 0.41 26.53 3.23 11.84 21.91 18.53 Institutions
restaurants Institutions include government buildings,
Source National Accounts Statistics Report 2000–05 monasteries, educational buildings, and hospitals.
Institutional constructions did not experience a
The commercial sector contributed about 4% major surge between 1999 and 2003. In 1998,
to the total GDP in 2000. With sustained high the total number of institutions (based on BPC
growth, the sector’s total contribution has almost estimates) was 1578, which reached 2539 by 2003.
doubled in a span of five years. The number of Since figures for 2005 were not available, the base
establishments, too, has grown during the same year number was estimated using the growth rate
period. As per the records of the BPC, 5431 of 12%, which the sub-sector experienced between
establishments existed in 2003. Based on the 1999 and 2003. For this sub-sector, the growth
available data, the average growth rate of 7% in the number of institutions between 2005 and
(growth between 2000 and 2005) has been used to 2020 has been kept at 12% for all the scenarios.
arrive at the 2005 figure, which is pegged at 6090 Based on the BPC supply figures, the electricity
(Table 14). Based on this rate, the total number consumption per institution was found to be
of such establishments can reach 16 460 by 2020. 8033 kWh per annum. Moreover, energy balance
On the other hand, a high growth rate of 10% can figures suggest that the wood consumption per
raise the number to 24 900. institution was 20 282 kg per establishment. In
The data on the total electricity supplied to the the EE scenario, the consumption of electricity
commercial sector has been obtained from the and firewood reduces to 5623 kWh and 16 266
BPC. The average annual electricity consumption kg, respectively.
was estimated at 3645 kWh. Given the energy
saving potential of 30% by switching to efficient Bulk
lighting and space heating, the specific electricity The growth in the bulk consumers has also been
consumption can come down to 2551 kWh. The pretty moderate between 1998 and 2003, for which
figures pertaining to the consumption of LPG figures have been made available by the BPC.
Table 14
GROWTH IN COMMERCIAL ESTABLISHMENTS AND ENERGY INTENSITIES
BAU EE HIG HIGEE
2005 2020 2005 2020 2005 2020 2005 2020
Number of shops/restaurants/ 6090 16 463 6090 16 463 6090 24 900 6090 24 900
commercial outlets
Electricity consumption per 3645 3 645 3645 2 551 3645 3 645 3645 2 551
establishment (kWh)
LPG consumption per 141 141 141 134 141 141 141 134
establishment (kg)
Fuelwood consumption per 1384 1 384 1384 1 107 1384 1 384 1384 1 107
establishment (kg)

CHAPTER
The total number of consumers has increased

Thousand tonne
from 250 to 364 during the same period, with an 500
452
439
average annual growth rate of 9.7%. This gives 450
us a figure of 439 consumers by 2005. Between 400
361
352
2005 and 2020, the growth was constant at 9.7% 350
300
across all scenarios. The electricity consumption
250
per consumer was 138 246 kWh. In the scenarios 200
that incorporate demand side management, 150
the consumption is expected to come down to 100 84
96 772 kWh. 50
0
2005 2010 2015 2020
Energy demand by commercial sector, by fuel Year
Energy demand for the commercial and institutional BAU EE HIG HIGEE
sector, by fuel, is presented in Figures 11–13.
FIGURE 13 FUELWOOD DEMAND
Electricity
The electricity demand is expected to rise to
477 million kWh under the BAU scenario, while
in the HIG scenario, it can be as high as
539 million kWh.
Energy efficiency can lead to 30% savings, with
the consumption coming down to 332 million kWh
and 378 million kWh under the EE and HIGEE
scenarios, respectively.
LPG
Estimate shows that LPG consumption was 926
tonnes in 2005, and it is expected to reach 3010
tonnes and 5000 tonnes under the BAU and HIG
scenarios, respectively, by 2020.
FIGURE 11 ELECTRICITY DEMAND
Fuelwood
Fuelwood consumption is likely to increase from
4991
Metric tonne
140 000 tonnes to 534 000 tonnes and 584 000
4719
5000
4500 tonnes by 2020, under the BAU and HIG scenarios,
4000 respectively.
3010
3500
2863
3000
2500 Transport sector
2000
1500 Bhutan’s transport sector comprises road and
1000 926 air transport. According to the Bhutan Statistical
500 Yearbook, till June 2005, the total length of roads
0 was 4392 km, which served a total land area of
2005 2010 2015 2020
Year 38 394 km2 and catered to a total population
BAU EE HIG HIGEE of 672 425 (Bhutan Census 2005). This gives a
road density of 0.114 km/km2 and 6.53 km/1000
FIGURE 12 LPG DEMAND inhabitants.

CHAPTER
Surface transport (road transport) is the Bhutan is characterized by the heterogeneity of

dominant mode of passenger and freight movement motor vehicles in terms of the fuel consumed and
for both inter- and intra-city movement in Bhutan. the end-use purpose served by each category of
Furthermore, the absence of domestic air network motor vehicles. The import of various categories
linking different cities/towns and the lack of of vehicles, along with their fuel type, is presented
alternative/competing transportation modes have in Figures 15 and 16.
made the road-based transportation modes the
preferred modes for transportation.With the growth
in the construction sector, transport, storage, and
communication have contributed significantly to
the GDP. In 2000, the share of the sector to total
GDP was 8.8%, which increased to 10.6% at the
end of 2005. The sectoral growth rate in 2000 was
found to be 10%, which significantly increased to
16.5% in 2005. The growth rate of the transport
sector and its contribution to GDP, by year, are
presented in Figure 14.
FIGURE 15 IMPORT OF MOTOR VEHICLES
Numbers
3000
2500
2000
1500
1000
500
FIGURE 14 TRANSPORT, STORAGE, AND COMMUNICATION,
0
PERCENTAGE SHARE AND GROWTH RATE 2000 2001 2002 2003 2004
Source National Accounts Statistics 2000–05 Year
Diesel vehicle Petrol vehicle
Vehicular growth in Bhutan FIGURE 16 VEHICLE CATEGORY, BY FUEL TYPE

There has been a significant increase in the number Source Various issues of Trade Statistics, Ministry of Finance,
of vehicles registered in Bhutan since 2000. The Royal Government of Bhutan
trend in the registered motor vehicles during the
period 2000–04 is presented in Table 15.
As shown in Table 15, the number of registered Energy consumption in the transport sector
motor vehicles has shown a consistently upward Diesel, gasoline, and ATF are the main fuels
trend between 2000 and 2004. The number of consumed in the transport sector. Alternative
motor vehicles increased by 1.4 times, that is, fuels like compressed natural gas (CNG) and LPG
from 19 463 vehicles in 2000 to 26 760 in 2004, are not used for transportation in Bhutan. The
an average annual growth rate of 8%. The rate of economy meets its entire energy demand through
increase in vehicle registration has been 8.2%. imports from India. Figure 17 gives the trends in
This gives a total of 40 vehicles registered per the quantity of imported fuels consumed in the
1000 population. The road transport system in transport sector.

CHAPTER
Table 15
NUMBER OF REGISTERED VEHICLES, BY TYPE AND REGION (2000–04)
Year Region Heavy Medium Light Two- Taxi Earth Others Total
vehicles vehicles vehicles wheeler movers
2000 Total 2062 NA 7 438 7793 770 NA 1400 19 463
Thimphu 410 NA 4 865 4599 548 NA 537 10 959
Gelephu 102 NA 274 604 11 NA 108 1 099
Phuentsholing 1348 NA 1 971 1894 210 NA 633 6 056
Samdrup Jongkhar 202 NA 328 696 1 NA 122 1 349
2001 Total 2853 697 8 905 8165 1188 408 268 22 484
Thimphu 472 389 5 821 4789 810 109 145 12 535
Gelephu 100 33 359 631 17 14 70 1 224
Phuentsholing 2068 241 2 399 2003 356 244 - 7 311
Samdrup Jongkhar 213 24 326 742 5 41 53 1 404
2002 Total 2747 770 10 071 8371 1423 464 614 24 460
Thimphu 553 411 6 691 5160 1013 135 427 14 390
Gelephu 96 46 383 627 18 14 89 1 273
Phuentsholing 1923 261 2 653 1837 379 267 17 7 337
2003 Total 4841 308 11 428 7507 1560 321 388 26 353
Thimphu 2654 0 7 586 4540 1079 0 134 15 993
Gelephu 85 49 332 628 441 10 138 1 683
Phuentsholing 1915 230 3 144 1608 21 272 17 7 207
2004 Total 4345 NA 12 638 7707 1682 NA 388 26 760
Thimphu 1386 NA 8 424 4660 1171 NA 134 15 641
Gelephu 149 NA 380 639 24 NA 138 1 192
Phuentsholing 2524 NA 3 438 1657 468 NA 17 8 087
Samdrup Jongkhar 286 NA 396 751 19 NA 99 1 452
Source Bhutan Statistical yearbook (2004)
Of the three major transportation fuels imported 1996 and 2005, has contributed to the increased
in Bhutan, diesel has the largest share—in 2005, it diesel consumption (increased transportation of
was close to 78% (51 440 kilolitres), followed by materials) in a major way. Again, the growing
petrol at 20% (13 755 kilolitres) and ATF close to economy, with increased per capita income and
2% (1200 kilolitres). The average annual growth stable inflation, has led to the growth in private
rate of the demand for petrol has been greater transport vehicles, thus leading to increased
than that of diesel. Between 1996 and 2005, the petrol consumption. As far as the ATF import is
annual growth rate of petrol was 15.3% and that of concerned, till 2004, the demand grew at a very
diesel, 12%. The sustained growth in demand for low rate. Increase in international tourists, coupled
diesel has been because of the construction sector. with the opening of new routes, has led to a sudden
Construction of three major hydel power projects, spurt in the demand for ATF. The growth rate for
that is, Kurichu, Basochhu, and Tala, between 2005 was 7.5% as against an average of 6.8%.

CHAPTER
Table 16
PARAMETER ESTIMATES
Unstd t Sigma
coefficient
Diesel
_const -17 020.6 -4.182 0.002
GDP 2.490 13.143 0.000
Petrol
_const -7494.327 -8.484 0.000
GDP 0.711 17.239 0.000
ATF
FIGURE 17 TRENDS IN THE QUANTITY OF IMPORTED
_const -4.090 -0.021 0.984
FUELS CONSUMED IN THE TRANSPORT SECTOR
GDP 0.043 5.397 0.000
Source Various issues of Trade Statistics, Ministry of Finance,
is concerned, light motor vehicles can achieve an
Demand projections for different categories of efficiency of 14.3% over the existing levels, and
transport fuels (diesel, petrol, and ATF) have been heavy vehicles can achieve an efficiency up to
made based on the bivariate regression analysis of 11.3%. Fuel efficiencies for different categories of
fuel imports and GDP. The regression forms used vehicles are presented in Table 17.
are as follows.
# Diesel import (litres) = α1 + β1GDPconstant Table 17
2000 (Ngultrum) + e1 FUEL EFFICIENCY FOR DIFFERENT CATEGORIES OF
# Petrol import (litres) = α2 + β2GDPconstant VEHICLES
2000 (Ngultrum) + e2 Vehicle type Existing Projected Percentage
# ATF import (litres) = α3 + β3GDPconstant efficiency efficiency improvement
2000 (Ngultrum) + e3 (km/l) (km/l)
Gasoline car 12 13.72 14.27
where e1, e2, and e3 are the random error Diesel car 11 13 18.21
components of the above regression equations.
Diesel big bus 3.6 3.83 6.36
Based on the least square method, some parameters
Diesel light- 8.5 9.52 12
were estimated, which are presented in Table 16.
duty truck
It is observed from Table 16 that when the GDP
Diesel heavy 3.7 4 8.12
increases by Nu 1 million, the consumption of diesel,
truck
petrol, and ATF increases by 2.49, 0.711, and 0.043
Source Bose (2005)
kilolitres, respectively. Using this estimate, the future
demand for these petroleum products is estimated
based on the assumption that the average annual Diesel car has the highest scope for efficiency
real GDP growth rate is 7.3%, the average growth improvement (18.21%), while heavy diesel buses
rate obtained from 2000–05 estimate (National have the least scope (6.36%). Based on these
Statistics Bureau 2005). In the HIG scenario, the assumptions of growth and efficiencies, the
average growth rate considered is 10%, which the demand for petroleum products for Bhutan has
economy achieved in 2002 (9.99%). Based on recent been estimated till 2020 under four different
research, there is a significant scope for improving scenarios. Figures 18–20 present the projected
fuel efficiencies, especially for the vehicles running demand for different transport fuels under four
on petrol and diesel. As far as the vehicle category scenarios.

CHAPTER
Diesel Aviation turbine fuel

# Diesel consumption in 2005 has been reported # In the BAU scenario, it is predicted that a
to be 51 440 kilolitres and is expected to reach total import of 3495 kilolitres of ATF will be
191 100 kilolitres in the BAU scenario as against required, while in the HIG, the import demand
284 000 kilolitres in the HIG scenario. can reach as high as 5074 kilolitres by 2020.
# Energy-efficient diesel engines can reduce the
consumption of diesel to 171 694 kilolitres and Kilolitres
256 178 kilolitres under the EE and HIGEE 6000
5074
5000
scenarios, respectively.
4000 3495
3000
2000
1201
1000
0
2005 2010 2015 2020
Year
BAU EE HIG HIGEE
FIGURE 20 DEMAND FOR AVIATION TURBINE FUEL
TOTAL ENERGY DEMAND PROJECTIONS

The above analysis shows projected demand, by
FIGURE 18 DEMAND FOR DIESEL sector, under various growth scenarios. The total
energy demand in thousand TOE for 2010, 2015,
Petrol and 2020 is shown in Figure 21. The energy
# Like diesel, petrol is also imported from India, demand projections, by fuel, from 2005 to 2020
with the volume of imports estimated at 13 775 in different scenarios are given in Annexure 3.3.
kilolitres in 2005. Projections from LEAP peg Energy consumption in TOE, by fuel, for the
the total import demand at 51 673 kilolitres in same time period, under various scenarios, is
the BAU scenario in 2020, while in the HIG shown in Figures 22 to 33. It is clear from the
scenario, the total demand is expected to be figures that if proper strategies are devised and
78 402 kilolitres. implemented, Bhutan can develop sustainably in
# Efficiency improvement of 14% for petrol-driven
engines can reduce the consumption to 44 439 Energy demand
(thousand TOE)
kilolitres and 67 426 kilolitres, respectively, in
1200
the EE and HIGEE scenarios, respectively. 1100
1000
900
800
700
600
500
400
300
200
100
0
2005 2010 2015 2020
Year
BAU EE HIG HIGEE
FIGURE 21 PROJECTED TOTAL ENERGY DEMAND IN

FIGURE 19 DEMAND FOR PETROL THOUSAND TOE, UP TO 2020

CHAPTER
future. Dependence of the residential sector on of view (pollution-related health hazards). This
fuelwood is alarming, but with strategic planning, problem, if tackled properly, can reduce kerosene
this dependency can be reduced to minimum consumption in these two sectors substantially.
by 2020. Similarly, kerosene consumption in the The following chapter suggests various strategies
residential and commercial sectors is another major for the implementation of suitable schemes in the
problem from sustainability and safety points country.
FIGURE 22 ENERGY CONSUMPTION IN BHUTAN BY 2010 FIGURE 24 ENERGY CONSUMPTION IN BHUTAN BY 2020
IN BAU SCENARIO, BY FUEL IN BAU SCENARIO, BY FUEL
IN BAU SCENARIO, BY FUEL IN EE SCENARIO, BY FUEL

CHAPTER
IN EE SCENARIO, BY FUEL IN HIG SCENARIO, BY FUEL
IN EE SCENARIO, BY FUEL IN HIG SCENARIO, BY FUEL
IN HIG SCENARIO, BY FUEL IN HIGEE SCENARIO, BY FUEL

CHAPTER
IN HIGEE SCENARIO, BY FUEL IN HIGEE SCENARIO, BY FUEL

CHAPTER 4
Energy supply options for Bhutan
INTRODUCTION # Fuels to meet heat and mechanical energy
The role of energy is crucial for any country that demand of the industrial, commercial, and
is traversing the rapid development path. It is an residential sectors (excluding electricity)
established fact that with the provision of energy,
the quality of life improves considerably—education This chapter covers the supply side options to meet
standards improve, along with health and hygiene, the demand, including various renewable energy
particularly that of women and children who options for sustainable supply of energy.
otherwise spend considerable time in collecting THE POLICY AND REGULATORY FRAMEWORK FOR
fuels. An Asian Development Bank (ADB) study THE POWER SECTOR
(2003) revealed that increased access to electricity
The policy for the power sector is in the draft stage;
raised the incomes of the Bhutanese people,
however, the policy and planning of the power
lessened the extent of health burden, and positively
sector in Bhutan have two major objectives.
contributed to improved education levels.
1 Emphasis on power exports to strengthen the
The Royal Government of Bhutan (RGoB)
economy
recognizes the importance of energy and has
2 Supply of reliable, environment-friendly, and
been taking several measures to accomplish its
affordable power for all citizens
ambitious goal of ‘electricity for all by 2020’, now
revised to 2013 with the Druk Phuensum Tshogpa
The overall policy and regulatory interventions
(DPT) Government in power. Bhutan is endowed
are guided by these two broad objectives. The
with rich water resources, along with abundant
accelerated hydropower development has been
biomass reserves, both being key energy sources
identified as an option for achieving these objectives.
for fulfilling the country’s energy needs. Both
The Ninth and the Tenth Five-year Plans indicate
these resources are being exploited in a sustainable
the policy direction for this sector.
manner to fulfil the energy needs of the people. The
To ensure reliable and affordable supply of
government has formulated Rural Electrification
electricity, the policy measures include allocating
Master Plan (REMP) 2005, which provides a road
15% of annual energy generated from all large
map to achieve 100% electrification in the country
hydropower plants for domestic consumption at a
within the stipulated time frame.
nominal rate of 0.3 Nu/unit. This is applicable for
As explained earlier, the energy needs of the
the power plants owned by the government or its
Bhutanese economy can be categorized in the
entities.
following manner.
For the supply of safe and reliable power, the
# Resources for electricity generation
Bhutan Electricity Authority (BEA) has put in
# Fuels and resources for the transport sector,
process a transparent methodology for determining
which is currently completely dependent on
tariffs for power generation and consumption for
fossil fuels (petrol and diesel)
different user categories. The policy is working

CHAPTER
4 ENERGY SUPPLY OPTIONS FOR BHUTAN
towards gradually removing subsidy being provided present, the sector accounts for about 22% of gross
to high voltage and medium voltage consumers domestic product (GDP), with 40% contribution
by 2011. As for others, primarily the residential towards the total national revenue generation. The
sector, the power would be supplied at subsidized latter figure would have been reached 60% with
rates as a social obligation so as to ensure socio- the commissioning of Tala Hydropower Plant in
economic development. 2007, but it is still about 40% because of the rapid
Given dispersed population and the complex growth in other sectors.
terrain, the electricity supply to all would require The hydropower potential of the techno-
major financial resources for grid extension. economically feasible sites is estimated to be about
Thus, the critical policy issues in the power 23 760 MW, of which thus far only 1.6% has been
sector are (1) accelerating development of the developed (Table 1). With the commissioning of
hydropower sector by attracting investments and Tala Hydropower Project (1020 MW), the total
assuring reliable supply, considering the seasonal installed capacity has risen to 1488 MW, and
variations in supply; and (2) extending the grid to the mean annual generation is now about 7412
supply affordable power to all, without affecting gigawatt-hours (GWh).
economic viability in the power sector.
A range of options to address
these issues is as follows. Table 1
# Accelerated development of CAPACITIES AND GENERATION OF MAJOR HYDROPOWER PLANTS IN BHUTAN
large hydropower plants
Chukha Kurichu Basochhu I Basochhu II Tala
# Development of medium
Installed capacity (MW) 336 60 24 40 1020
hydropower plants in
independent power producer Firm capacity (MW) 67 24 5 10 168
(IPP) mode Mean annual generation 1860 400 105 186 4865
# Promotion of medium (GWh)
hydropower plants for captive • Firm energy (GWh) 587 210 44 88 1472
use in industries • Seasonal energy (GWh) 1263 190 62 98 3393
# Enhancement of power capacity Source WRMP (2004)
of a firm by diversifying the
electricity supply options, mainly through While the hydropower sector is the propeller of
renewable energy sources (other than the Bhutan’s economy, to ensure that hydropower
hydropower). development does not take place in a haphazard
manner but proceeds on the basis of careful
These would be dealt with in detail subsequently. identification of most promising sites, the RGoB
updated the Power System Master Plan (PSMP)
POWER SECTOR DEVELOPMENT of 1993 for the period 1990–2010 to cover
The power sector in Bhutan is synonymous with partially the period 2003–22 in its Water Resource
the hydropower sector, with more than 99% of Management Plan (WRMP) 2004. The WRMP
electricity being generated by the hydropower 2004 screened hydropower projects on the basis
sector. The hydropower sector has been the main of technical and economic criteria to select most
driver of the Bhutanese economy, and through promising projects, which were then subjected to
revenue earnings from the sale of electricity, it has Multiple Criteria Analysis (MCA)1 for the eventual
spurred country’s socio-economic development. At adoption in the WRMP.
1
MCA facilitates comparison of projects that may have different types of impacts of highly varying magnitude. The variables are
grouped under four key criteria, representing important objectives of the Government of Bhutan: technical, economic, social, and
environmental.

CHAPTER
ENERGY SUPPLY OPTIONS FOR BHUTAN 4
The WRMP 2004 identified 78 potential run- Seasonal variation in electricity production
of-the-river projects in Bhutan for hydropower Bhutan has been exploiting its vast hydropower
development, with capacity above 10 MW, and potential in a sustainable manner, with the
estimated that if 25 of the 78 sites were developed, existing plants being run-of-the-river schemes as
the installed capacity would be around 16 435 opposed to storage-based plants. While the run-
MW. Based on the screening of the projects, six of-the-river schemes ensure relatively benign use
potential projects were selected for implementation of environmental resources, the biggest challenge
during the Power Master Plan period of 2003–22. posed by them is their inability to operate at full
The details of these are provided in Table 2. capacity in the lean season when the river flow
remains low. This is particularly true in winter
Table 2 months when the demand is at the peak without
DETAILS OF SELECTED POTENTIAL MAJOR HYDROPOWER secure sources of energy supply.
PROJECTS With the commissioning of Tala Hydropower
Project Installed Estimated Construction Plant, 288 MW of firm power (power available
capacity investment period in the lean season) is available. Currently, the
(MW) (million US peak demand is about 211 MW, and as per the
dollars)a demand projections, it would rise to about 500
Punatsangchhu I 1002 861 2007–11 MW in near future (2012), if all the sanctioned
Mangdechhu 670 588 2009–13 industries become operational. The Department
Punatsangchhu II 992 875 2011–15 of Energy (DoE) plans to tackle this shortage in
the following ways.
Chamkharchhu I 671 547 2014–19
# Licenses to new ferro alloy industries will be
Chamkharchhu II 568 407 2018–22
given only after taking a long-term and holistic
Kholongchhu 486 383 2020–23 view of (1) the peak power demand in the
4389 3661 country and (2) firm power availability.
a
2003 prices, inclusive of the cost of transmission to India, exclusive # In case of shortage of power, priority will
of interest during construction be given to the residential and institutional
Source WRMP (2004) sectors.
# The Bhutan Power Corporation will regulate
While there exists considerable hydropower the allotment of power to industries.
potential in Bhutan, there are several constraints # Power plant output will be augmented using
in fully exploiting this potential, encompassing better water management techniques to boost
technical, financial, environmental, and market production during peak hours.
limitations. One unique characteristic of the # Efficient management of hydropower plants will
Bhutanese power sector is its complete dependence be undertaken.
on hydropower and run-of-the-river type plants.
Also, there is an issue of energy security due to Financing of hydropower projects
overdependence on hydropower. The issue of raising capital to invest in the
The run-of-the-river-type plants are additional power generation is a big challenge
environmentally benign and have lower cost of for Bhutan, which does not have an international
power generation compared to the other renewable credit rating. As seen in Table 2, for the six potential
energy resources; however, this has rendered the power plants, determined by the WRMP (2004),
development of power plants in any other sector an investment of about $3660 million is required,
– renewable or conventional – commercially which translates into capital expenditure of $183
unviable and unattractive. million per year.
Mobilization of the resources of this magnitude,
however, remains a critical issue, given the limited

CHAPTER
domestic resources and the current problems in Given that the investment in large hydropower
attracting private sector to invest in the hydropower projects is not readily forthcoming, it remains
sector. important from the energy security perspective
Though the Government of India has been that plants of small or medium capacities, typically
expressing interest in financing the hydropower about 100 MW capacity each, are planned and
sector in Bhutan and has also committed to established. These plants should be promoted in
purchase extra power, the question is to what eastern Dzongkhags, which are underdeveloped
extent can Bhutan expect such financing options and where power outages are very common.
from India (Table 3). According to the WRMP, To accelerate the development of the hydropower
a number of factors would eventually determine sector in Bhutan, Hydropower Policy, 2008, has
the availability of international financing for been finalized, although it is yet to be notified.
hydropower development in Bhutan. The major Besides, a holding company called the Druk Green
challenge for hydropower funding is devising Power Corporation (DGPC) has been established
packages with debt servicing and maturities. Often, to allow for optimal utilization of resources and
the potential imbalance between revenue and debt enhance capacity building. It would also serve
service, along with the level of risk involved in the as an investment arm of the government, which
project, prevents investors from financing large would invest in future hydropower projects.
hydropower projects. For an accelerated development of the
The most important factor with respect to the hydropower sector, case studies have been evaluated
above is the size of the schemes—given the large to assess various proposed/feasible power plants
size of hydropower schemes, financing is difficult. under different financing options under IPP and
It is suggested that to overcome this problem, a captive power plant mode. These case studies are
public–private model, together with the backing discussed in subsequent sections.
of an international lending agency, could be
considered. Besides the size, securing finance Development of large hydropower plants
rests on the prospects of achieving a return on Till now, the development of large power plants in
the capital, which should be sufficient to cover the Bhutan was financed through a mix of loans and
level of risk involved. One such type of model that grants. For accelerated development, other means
can be considered is the build, operate, own, and of developing large hydropower plants would be
transfer (BOOT) model, which could be backed required. Hydropower plants on IPP mode can
by the international lending agencies (Box 1). also be developed with the help of public and
Table 3
FINANCIAL CHARACTERISTICS, BY PLANT
Plant Year of Financial support option Source of
commissioning finance
Chukha 1988 60% of grant and 40% loan financing model, with an interest rate of 5% per annum and a India
repayment term of 24 years
Kurichu 2002 60% of grant and 40% loan financing model, with an interest rate of 10.75% and repayment India
period of 12 years
Basochhu I 2001 The loan amount was to be repaid in equal instalments over 30 years Austria
Basochhu II 2005 The loan amount was to be repaid at an interest rate of 2.78%, with repayment period of 15 Austria
years, along with a commitment fee of 0.15% and a management fee of 0.25% of the total
loan payable in four instalments
Tala 2007 40% of grant and 60% loan financing model, with an interest rate of 9% per annum and 12 India
years of repayment

CHAPTER
BOX 1
BUILD, OPERATE, OWN, AND TRANSFER MODEL
A build, own, operate, and transfer, or BOOT, model is a funding model that involves a single organization or
period of time and then transferring this ownership across to an agreed party. The BOOT schemes are increasingly
becoming a popular means of financing large-scale infrastructure development such as roads, bridges, and
hydro dams in Australia and developing countries. An example in this respect is the 210 MW Theun-Hinboun
Hydropower Project in Lao PDR, which developed in joint venture between the Government of Laos (GoL) and
the private sector. The Laos government’s state-owned electricity utility, Electricité du Laos (EdL), owns 60%
of the project and the investment in the project is largely financed by a loan of $60 million from the Asian
Development Bank (ADB). The ownership of the remaining 40% share of the project is split equally between the
Thai company MDX Lao and Nordic Hydropower, a partnership organization owned by the Swedish government
public utility. The total cost of the project is $240 million. It is being financed and developed as a BOOT venture
that would see the project transferred back to the government in 30 years. The Theun-Hinboun Power Company,
or THPC, is running this joint venture project.
Source <http://www.mekong.es.usyd.edu.au/publications/briefs/ mekong_ brief3.pdf>, last accessed on 21 April 2007
private partnerships or foreign direct investment Capacity 670 MW

(FDI). The private investment as well as FDI
Capital cost Nu 37 520 million
would depend on the viability of the projects as
based on hydropower
well as policies and regulations in the power sector.
projects proposed under
The viability of these plants will, in turn, depend
Government of India
on their cost of generation. A financial analysis to
financing/collaboration
estimate the generation cost for such power plant
Loan 70% @ 9% interest rate
was carried out using lifecycle cost approach, as
explained subsequently. Since the revenue of these Equity 30%
IPP would be in Ngultrum or in Indian rupees, an Return on equity 15%
arrangement could be worked out for the import Construction 6 years
of the required equipment from India. period
Large hydropower projects are developed Life 30 years
primarily for exporting power to India, with
Net annual 3207 GWh
certain percentage of power reserved for domestic
generation
consumption.
Operation and 1.5% of capital cost
Case study I: Cost–benefit analysis for maintenance
Chamkarchu Power Plant as independent cost
power producer Export of power 85%
An analysis was carried out for the Chamkarchu Export price 2.00 Nu/unit
Hydropower Plant, one of the seven identified Wheeling 0.125 Nu/unit
hydropower plants in the master plan, to check the charges for
financial viability of large power plants as IPP with export
the present policy. The analysis is summarized as 15% domestic 0.30 Nu/unit
follows. power supply at
The analysis was carried out by estimating the

cost of generation as per the ‘tariff estimation

CHAPTER
methodology’ issued by the BEA. The details of

Table 4
the analysis are given in Annexure 4.1. The analysis
MEDIUM-CAPACITY POWER PLANTS IDENTIFIED IN THE
shows that the cost of generation is Nu 1.73/kWh.
POWER SYSTEM MASTER PLAN
The implementation of the present policy of reserving
15% generation for domestic consumption at Nu River Identified capacity (MW)
0.3/kWh and export of rest of power at Nu 2.0/kWh Pachhu 77

shows that the generation is financially viable, with Samchhu 71
return on equity more than 15%. Thus, the present Churchhu/Chechhu 45
policy of promoting large hydropower plants that Thimphuchhu 57
export power and also provide power for domestic
Chari/Thimphuchhu 76
consumption at subsidized rate can be continued.
Parochhu 85
If there are major changes in the financing terms,
then the strategy may have to be reworked, that is, Haachhu 17
the rate at which power is sold for domestic use Bemengchhu 14

would have to be adjusted to make the projects Piping 55
viable. The analysis carried out was on completely Sichhu 78
commercial basis, that is, without any grant. With Tang/Pechhu 85
economic viability of the large hydropower plants,
Tang/Pechhu 78
that is, they continue exporting power to India, these
Cherchhu 25
power plants can also be developed on IPP or FDI
mode. Another option is developing these plants Dagachhu 79
on BOOT mode. As explained earlier, equipment Samachhu 16
imports could be facilitated from India to take care Rimjigangchhu 24
of hard currency issue. Krissa 32
Burgongchhu 69
Development of medium-capacity hydropower
Burgongchhu 70
plants
Ghijam/Lirigang 53
In addition to large-capacity plants, there exists
Chamkharchhu 97
large potential for medium-capacity (up to 100
MW) hydropower plants. The Power Systems Shergarchhu 27
Master Plan has identified about 36 plants of Rimjigangchhu 46
capacity up to 100 MW, as shown in Table 4. Thampochhu 95
An analysis of the small- and medium-sized Bambuchhu 22
hydropower plants was carried out to examine the
Nayurgangchhu 24
viability of promoting such plants in IPP mode
Gobarichhu 43
with private sector investments and as captive
hydropower plant for energy-intensive industries. Sherichhu 36
Gamrichhu 64
Case study II: Medium-sized hydropower plant Gamrichhu 79
development as independent power producer Gamrichhu 80
This analysis is based on typical design parameters
Gamrichhu/Yemkhari 81
for the feasible sites and costs, which are estimated
Kholongchhu 94
based on Indian experience for similar capacity
plants in similar Himalayan region. Jaldhaka 19
The detailed calculations are given in Mao/Aie 83

Annexure 4.1. Dhansiri 73
Total 2069

CHAPTER
The major assumptions are as follows. These power plants can be studied, primarily,
for the expected capital cost and annual generation,
Capacity 100 MW and can be offered to the private sector developers
Capital cost Nu 60 million/MW with private investment (domestic or foreign),
since the total investments (about Nu 60 million
per MW) are not very large, and the private sector
Equity 30% can look at the option of establishing such plant.
Return on equity 14%
Construction 2 years Case study III: Development of medium-
period capacity hydropower plants in captive mode
Life 30 years The medium-capacity hydropower plants could
also be used for captive generation by industries.
Net annual 482 GWh
Private sector companies interested in setting up
generation
energy-intensive industry would look at these
Operation and 2% of capital cost @ 2%
medium-sized plants as captive power generation
maintenance cost annual escalation
units to ensure enough power supply round the
Export price Nu 2.00/unit year. This scenario was analysed for medium-
Wheeling charges Nu 0.12/unit capacity hydropower plants. The assumptions are
for export same as in the case of the analysis of medium-
capacity power plants. The analysis shows that the
The cost of generation, estimated as per the BEA cost of generation is higher for medium-capacity
methodology for tariff estimation, for medium- hydropower plants in full commercial mode, that is,
capacity hydropower power projects works out to without any capital grants. The cost of generation
be about Nu 1.68/kWh, since the capital as well is about Nu 1.88/kWh, which is higher than the
as operation and maintenance (O&M) costs per present tariff paid by the industry. Thus, it would
megawatt of installed capacity for these plants are not be viable for industries to invest in medium-
higher than the large hydropower plants. With the capacity hydropower plants for captive generation.
present domestic tariff, it will not be viable for the However, as the cost of generation is lower than
IPP to sell 15% power for domestic use at Nu 0.3/ the export price, the medium-capacity hydropower
kWh. In that case, the sale price for the rest 85% plants should be promoted as captive power plants
becomes higher than the export price to get 14% by providing capital grant or subsidy. The capital
return on equity. The IPPs can sell up to 10% of subsidy would make the generation cost comparable
power at 0.3 Nu/kWh for domestic consumption to the present high voltage tariff. In such a scenario,
and sell/export the rest of power at export rate to if the industries invest in captive generation, then
get 14% return on equity. equivalent power would be available for exports.
Thus, the IPPs would be viable with this model, A sensitivity analysis shows that the capital grant
that is, domestic sale of 10% generation at Nu of 40% of project cost brings the generation cost
0.3/kWh and rest exported/sold at export price. down to Nu 1.2/kWh, which is the present tariff for
This analysis assumes 9% interest rate. Any industry. Thus, with generation costs comparable
upward change in the interest rate would affect with present high voltage tariff, the industries
the viability of the medium-capacity power plants. could become interested in setting up captive small
For example, the analysis with 12% interest rate hydropower units. Further, as the cost of generation
shows that the generation cost reaches about Nu includes 14% return on equity, making additional
1.86. With this generation cost, it would not be investment in captive generation by the industry
viable for the IPP to sell any power at subsidized is also a viable option. Table 5 shows the cost of
rate of Nu 0.3 /kWh. generation at different levels of subsidy. Detailed
calculations are given in Annexure 4.1.

CHAPTER
export to Bhutan will be another issue, as India

Table 5
itself is a power-deficit country. To address this
COST OF GENERATION AT DIFFERENT LEVELS OF SUBSIDY
issue, the Bhutan Power Corporation, along with
Capital grant (%) Cost of generation (with 15% Rate of return the Department of Energy (DoE), is regulating
return on equity) (Nu/kWh) on capital
the allotment of power to industries. The licensing
grant
to the industries has been done considering the
5 1.78
availability of firm power. This policy deals with
10 1.69 55 the demand side management. On the supply
15 1.60 36 side, the options for augmenting power generation,
25 1.41 21 more importantly, the firm power availability, are
35 1.22 15 accelerated development of large as well as small
40 1.17 13 hydropower plants. As large power plants have
longer time of construction, development of small-
From the government’s perspective, by providing, and medium-capacity hydropower plants may be
say, 35% grant, the benefit would be in terms of undertaken. The private/foreign participation may
having surplus energy, which could be exported be encouraged, as discussed in the earlier section.
at a price of Nu 1.85–2/kWh. Thus, against the Since the run-of-the-river hydropower plants will
expenditure of 35% grant, there is additional have seasonal variations, there would be limited
income through higher exports. A conservative improvement in the availability of firm power. The
estimate shows about 40% rate of return through options for improving the firm power, therefore,
export of power against 35% expenditure as could include the following.
subsidy for captive plants. Here the assumption # Development of storage-based hydropower
is that any amount of energy can be exported plants
at any point of time at fixed export rate. This is # Development of power generation from
possible since the Government of India has agreed renewable energy sources
to buy power up to 10 000-MW capacity under
Case study IV: Development of reservoir
the umbrella agreement.
hydropower plants
Seasonal variation, energy security, and power Given high hydropower potential, there is a
plant development possibility of developing
Medium-sized (@100-
reservoir-based hydropower
As all hydropower plants in Bhutan are ‘run- MW capacity) plants
plant in Bhutan. The DoE
of-the-river’ type, the power generation has a can be promoted
is considering developing
very high seasonal variation. In winter season, through IPP or
the Sankosh Hydropower
hydropower generation drops to almost 20% of captive power plant.
Project in reservoir mode.
its installed capacity. Thus, there is a critical issue This will not only
However, the capital
of availability of firm power. After commissioning help increase power
investment required for
of Tala Hydropower Plant, the available firm exports but also
reservoir hydropower
power has reached about 253 MW. Based on the reduce firm power
plants is higher than the
projected energy demand by the WRMP (2004), availability problem
run-of-the-river plants, and
it must be noted that in case no new hydropower and improve speed of
thus, the cost of generation
plants are developed soon after Tala, the peak industrialization.
is also higher. An analysis
supply capacity in winter months will fall short
was carried out to study the
of projected peak power requirements. In such a
economic viability of the Sankosh Hydropower
situation, Bhutan would have to resort to power cuts
Plant under present policies and export price. The
or power imports from India, which would impact
results of the analysis are as follows.
the country’s export earnings from electricity
sale. Further, whether India has surplus power to

CHAPTER
Capital cost Nu 139 197 million of off-peak electricity demand. This would help in
(based on the hydropower addressing the issue of lean periods when in normal
projects proposed under course, hydropower generation is quite low.
Government of India Typically, in a pumped storage plant,
financing/collaboration) approximately 75%–85% of the electrical energy
used to pump water in the elevated reservoir is
regained. This system can respond very fast to load
Equity 30%
fluctuations.
Return on equity 14% In the context of Bhutan, which generates almost
Construction 6 years all electricity as hydropower, pumped storage
period schemes or storage dam schemes would be ideal
Life 25 years schemes for grid energy storage. Barring industrial
Net annual 6918 MWh loads, the demand for electricity fluctuates a great
generation deal during the 24-hour cycle, and effectively
designed pumped storage system can help in
O&M cost 2% of capital cost
conserving energy.
Export price 2.00 Nu/unit
Wheeling charges 0.2 Nu/unit POWER GENERATION USING RENEWABLE ENERGY
for export In Bhutan, renewable and non-conventional energy
sources like solar, wind, biomass, and municipal
The cost of generation, estimated as per the BEA solid waste can be harnessed for power generation.
methodology for tariff estimation, for reservoir The power generation through these sources would
hydropower projects works out to be about 1.56 provide diversity in the power portfolio, which
Nu/kWh, since the capital and O&M costs are presently consists mainly of the hydro resources.
higher than those of large hydropower plants. As The power generation from biomass could be a
a result, the generation cost is higher. With the viable option, given high forest cover in Bhutan.
higher generation cost and the policy of reserving Sources like sun and wind could also supplement
15% of generation for domestic consumption at power generation. These technologies could also
0.30 Nu/unit, the storage hydropower plants may be used for decentralized power generation. Given
not be economically viable. To make them viable, the resource availability, the option for generating
the limit for the sale of power at Nu 0.3/units may power from biomass in a centralized mode and
have to be reduced. This is desirable, as such power using wind and solar photovoltaics in off-grid mode
plants would provide much needed firm power in could be explored. Similarly, utilizing municipal
winter months. The analysis is done without any solid waste for energy generation can also help
grant component; if any grant is made available, in addressing issues related to viable disposal
the generation cost would reduce accordingly. and management of ever-increasing solid waste
At this stage, it is appropriate to look at the other in Bhutan’s urban centres. A detailed analysis of
renewable energy options for power generation to renewable energy options for power generation is
reduce dependence on hydropower. provided in the subsequent sections.
Development of pump storage schemes Alternatives to hydropower

Pumped storage hydroelectricity is a type of It is advisable to enhance the diversity of resources
hydroelectric power generation used for load for electricity generation, and since the next major
balancing. In a pumped storage plant, the energy hydropower plant of the country, Punatsangchu I,
is stored in the form of water, pumped from a lower would be operational only in 2015, it is essential to
elevation reservoir to higher elevation. This is an look at the options to augment the current power
effective way of storing energy during the periods generation capacity by promoting and exploring

CHAPTER
other renewables such as biomass, solar, and In recent times, biomass fuels are increasingly
wind. used after their conversion into more efficient
Under the proposed strategy to develop other energy carriers with higher calorific value (such
energy resources for both electrical power and as pellets, briquettes, bio-diesel, and biogas) and/
thermal energy generation, an analysis of other or are used in the efficient equipment (such as
renewable, non-conventional, and fossil fuel improved cook stoves and gasifiers). This usage is
resources has been carried out. This analysis aims collectively termed as ‘modern’ bioenergy.
at giving a holistic view of the energy resources The modern bioenergy has been playing small
and supply position. The overall objectives are as but increasingly significant role in recent times. It
follows. assumes greater significance in several countries
# To reduce heavy dependence on hydropower and economic sectors, especially in well-forested
(more than 99% of the electricity produced in countries with large forestry-based industries and/
the country is hydropower). or the countries with cold winters and large space
# To augment electricity supply or reduce demand heating demands (ESMAP 2005). For example, in
during winter season so as to meet the challenge Finland and Sweden, modern bioenergy accounts
of low hydroelectricity production due to lower for 33%–36% of total energy used by the industry
water flows in rivers. sector, of which 11%–12% of energy is used for
# To reduce the use of fossil fuels in the transport electricity generation, combined heat and power
sector. (CHP) generation, and district heating (IEA 2002,
# To introduce environment-friendly and locally 2003a). Interest in modern bioenergy has been
available fuels/energy resources to meet demand increasing worldwide. It is increasingly occupying
for energy, especially in remote and dispersed centrestage in renewable energy plans and policies,
locations. especially in the developing countries, because of
myriad practical, social, and economic advantages
BIOENERGY that it offers.
Bioenergy (biomass energy) refers to the use of Modern bioenergy offers five major advantages
plant and other organic materials to provide desired over fossil and/or other renewable energy
forms of energy and energy services such as heat, resources.
light/electricity, and motive power. Bioenergy has 1 It is a widely available resource.
been a primary source of energy since human 2 Bioenergy is essentially stored energy and is
civilizations discovered fire. Even today, bioenergy available all the times.
accounts for about 11% of the world’s total 3 Bioenergy can be converted to all major energy
primary energy supply of 420 exajoules (EJ) a year forms like electricity, liquid fuels or gaseous
(ESMAP 2005). Forest-based biomass has been fuels for use in stationary as well as transport
the main source of energy in Bhutan for many applications.
centuries. Abundantly and freely available biomass 4 It does not contribute to greenhouse gas
has become the natural choice for fuel for the rural concentrations. Apart from being ‘carbon
population of Bhutan. neutral’, it also contributes to habitat
Bioenergy has been reviewed briefly in the preservation, watershed protection, and soil
following sections so as to develop a deeper conservation.
understanding of this form of energy. Some 5 Modern bioenergy is widely thought to play
bioenergy-related issues are also highlighted a key role in promoting rural development
(Box 2). (UNDP 1995). In developing countries like
Biomass largely consists of unrefined fuels that Bhutan, bioenergy can form a basis for rural
are used in a traditional way, such as solid biomass employment and income generation, thus
used in traditional cook stoves for cooking, water helping curb migration from rural to urban
heating, and space heating. areas.

CHAPTER
BOX 2 BIOENERGY-RELATED ISSUES

Bioenergy has its own limitations. Bioenegry activities are labour-, land-, and resource-intensive. Bioenergy
activities directly affect communities. Most importantly, supply side activities set bioenergy apart from other
renewable energy resources that are freely available. In contrast, bioenergy resources must be grown, harvested,
gathered, and transported to the energy conversion plant, sometimes from large number of dispersed suppliers.
These must be stored, dried, and/or processed – chopped or pelletized – for using them as biofuel (Energy Sector
Management Assistance Program [ESMAP] 2005). While supply chain activities can bring substantial benefits
in the form of local employment and income, they may also raise serous problems like competitive land use
and labour system, which form the backbone of rural economies. This necessitates the need for evaluating the
impacts of bioenergy project on rural employment and the environment. The risk to existing biomass-dependent
social groups or activities should also be taken into account.
The ESMAP study has identified seven main areas of particular importance to bioenergy project development,
as listed below.
1 Resource competition Most biofuels have other uses as well. So, biofuels may face price competition.
Competition with nonmonetized traditional biomass supplies that provide essential ‘survival’ energy is
common and must be dealt with at early stages of project planning.
2 Land competition Energy plantation may compete for land with other plantations or other uses.
3 Land intensity Bioenergy plants are highly land intensive. For example, they typically require roughly 100
times more land than solar photovoltaics to produce same amount of electricity. This physically limits the
feasibility of bioenergy systems.
4 Labour intensity
5 Handling requirements Bioenergy fuels are relatively bulky and need infrastructure to handle.
6 Environmental concerns Biomass systems, if not well designed, can have adverse impacts on soil quality, water
resources, biodiversity, and landscape.
7 Supply uncertainty and risks
Use of liquid biofuels country. The country consumed about 724 000
Liquid biofuels such as straight vegetable oils tonnes of firewood during 2005, which accounted
(SVO) and bio-diesel are currently being explored for almost 57% of the total primary energy supply.
as alternatives to petroleum fuels, especially for the With the sustainable yield for timber and fuelwood
transport sector. However, in case of Bhutan, these estimated at 1 565 540 tonnes/year, biomass would
fuels will have limited role to play due to limited continue to remain an important source of energy
land available for cultivation. In Bhutan, only about for Bhutan.
7% of the land is under cultivation. The rest of the
land has forest cover. Wasteland constitutes a very Biomass-based power generation
small area, and hence, bio-oil-bearing plantation Biomass-based power generation – either through
for bio-diesel production will have direct conflict direct combustion or through gasification route
with food security and agriculture production. – is an established technology worldwide. Further,
Biomass fuels,2 primarily sourced from forests, with the hydropower generation being seasonal
play a vital role in the economy of Bhutan, as they in Bhutan, biomass-based power generation can
are the main energy source for a large number provide an option to increase the power generation
of rural enterprises, apart from majority of capacity for continuous power generation. Besides,
households in the rural and urban areas of the biomass used for power generation can contribute
2
The term biomass generally refers to the renewable organic matter that originates from living organisms, for example, wood, agricultural
residues, animal manure, so on.

CHAPTER
to fuel diversity. Therefore, it is suggested that a for larger thermal applications like institutional
5-MW biomass-based power plant be installed as cooking, while the biomass/saw dust briquettes
a demonstration plant. Based on the operation of can be used with efficient heating devices. A
this demonstration plant, the DoE can further plan description of the biomass densification technology
for additional biomass-based power generation. is given in Annexure 4.3, and biomass gasification
The proposed 5-MW biomass-based power technologies and their thermal applications are
plant can be supported by energy plantation to briefly discussed in Annexure 4.4.
ensure sustainable fuel supply. A detailed techno- The success of the sawdust briquetting plant
economic analysis of such a plant is presented in operated by the Forest Development Corporation
Annexure 4.2. Salient features of 5-MW biomass- Ltd (FDCL) indicates the potential for the use
based power plant are as follows. of biomass/saw dust briquettes for thermal
applications. In this regard, the DoE can develop a
Capital cost Nu 225 million programme for sawdust and biomass briquetting in
Fuel consumption 2 kg/kWh the Tenth Plan.The small-sized sawdust briquetting
in combination with individual sawmills could
Biomass required 15 000 tonnes/year
immediately go onstream. This programme can
Electricity production 30.66 MU/year include the promotion of efficient cooking/heating
appliances.
Off-grid power generation using biomass
The small-scale biomass gasifier is an established Pelletization
technology, wherein the producer gas produced in Pelletization is now a well-established technology
the gasifier can be used for various applications, in Europe. Pellets are produced from various
including power generation. The locally available raw materials like agro-waste, sawdust, and pine
biomass can be used for decentralized power needles. Pellets are easy to handle and transport,
generation using biomass gasifiers. These biomass- and advanced automatic pellet stoves and space
gasifier-based power plants can be deployed in heaters have made pellets simple and efficient to
remote off-grid locations. It is suggested that use. The Renewable Energy Division of the DoE
five biomass-gasifier-based decentralized power can take up a feasibility study on adopting pellet
plants for rural electrification be established as technology in Bhutan. With vast areas under pine
demonstration projects on priority. Typically, these and other forests, pellet manufacturing from
plants have capacities ranging from 5 kW to 100 forest waste can substantially reduce the demand
kW and can be established for supplying grid- for fuelwood for space heating in both urban and
quality power for a village or groups of villages. rural areas.
Similarly, demonstration of biomass gasifier
for thermal application like institutional cooking,
Gasifier-based grid power generation
cardamom drying, and lemon grass oil extraction
(5–100 kW)
can be taken up in the Tenth Plan.
Capital cost Nu 0.1 million/kW
Fuel consumption 1.6 kg/kWh Wind energy
Wind-based electricity generation is now a well-
Thermal applications of biomass developed commercialized technology. Worldwide,
Biomass is currently used for heating and cooking wind energy is increasingly being utilized. Bhutan
purposes in the residential and institutional does have good wind potential; however, the
sectors. The present biomass appliance/technology development of wind farms is still constrained by
can be changed to modern efficient biomass various issues, as discussed subsequently.
technologies like gasifier and briquetting for
thermal applications. Biomass gasifiers can be used

CHAPTER
Infrastructure development
Solar PV wafer and cell production unit
Road and power evacuation infrastructure is yet
Solar PV wafers, which are used to produce solar cells,
to be developed. Typically, wind machines of large
are produced from raw silica/sand using energy-
capacities are installed on 50–80-m-high tower, and
intensive process mostly using electricity. Since Bhutan
wind generator blades are typically 20–30 m long.
has cheap and renewable hydro energy in abundance,
Current road infrastructure may not be adequate
use of hydro energy for manufacturing solar PV wafers/
to transport these blades and heavy machinery.
cells can be an interesting application to produce ‘green
solar cells’. Some solar cell manufacturers have shown
Public opinion about wind machines
interest in this concept. Installation of such a plant in
During the discussions with officials and policy-
this region can bring down the cost of solar PV cells and
makers, it was found that there were certain
systems substantially, making them cost-effective.
reservations on the installation of large wind
machines due to the concerns about natural beauty
for which Bhutan is famous. 1 Solar systems, which include solar thermal
systems such as water heating systems and solar
Small wind machines and water pumping photovoltaic systems.
wind mills 2 Solar passive systems for building heating.
Bhutan, thus, can explore small wind machines of
capacity less than 100 kW and mechanical wind Various solar technologies are being developed
pumps to generate electricity in isolated locations worldwide, and various products are available
for scattered households and can use water in the market. Few systems such as solar home
pumping mills for providing water for irrigation and lighting systems and solar water heating systems
drinking. A detailed technology write-up on small are useful for distributed applications in the
wind machines is presented in Annexure 4.5. residential sector. These are discussed in detail in
Small wind machines can also be coupled with the next chapter.
solar photovoltaic power plants in hybrid mode to
generate electricity for small villages.These isolated Solar photovoltaic for power generation
and distributed power generation technologies can Solar photovoltaic technologies are expensive but
play an important role in reducing time and cost can be considered as an alternative for electricity
of extending infrastructure to supply electricity to production. Grid-connected solar photovoltaic
far-flung areas. These minigrids can be connected plants of few hundred kilowatt capacities are
to main grid, once the grid is established. generally cheaper. Currently, solar photovoltaic
power generation costs are in the range Nu 15–30/
Solar energy kWh, depending on the site, technology, and size of
Bhutan has reasonably good solar energy the plant.These costs are, thus, very high compared
potential. Although detailed time series ground to hydropower generation costs unless the cost of
measurement data is not yet available, the solar grid extension as well as low capacity utilization
energy resources quantified at various places of this infrastructure are also taken into account.
and solar energy resource map developed for the However, solar photovoltaic is an excellent option
region under Solar and Wind Energy Resource for distributed generation, since solar resource is
Assessment (SWERA) project of the United freely available; systems are modular, stationary,
Nations Environment Programme (UNEP) have and easy to install; there are no moving parts,
shown a resource potential of 4.5–5 kWh/m2 in and O&M is cheaper. Hence, the technology can
various locations. be considered on demonstration basis by installing
Solar energy can be exploited in various ways, plants of, say, 100-kW capacity. Currently, under
but two major ways to use solar energy in Bhutan the Integrated Energy Management Master Plan
are as follows. (IEMMP) project, the DoE has planned to install

CHAPTER
first gird-connected solar photovoltaic plant of 2.3 for small-scale distributed power generation using
kWp capacity as demonstration project. hydrogen. The Ministry of New and Renewable
Energy, Government of India, has recently
HYDROGEN AS ALTERNATIVE ENERGY CARRIER announced an ambitious project that envisages
CUM STORAGE introducing 10 million two- and three-wheelers
Hydrogen is emerging as a clean energy carrier in running on hydrogen in India. The Government
recent times. Though hydrogen technologies are of India and the RGoB can take up a joint project
still in development and testing phase, considering to explore hydrogen production using hydropower
the thrust and importance given to the research and and/or wind energy. This would be a major step in
development for developing hydrogen technologies, enhancing energy security for Bhutan.
it is expected that hydrogen can become a major Recently, Young and others have published a
energy carrier and energy storage option in paper, which considers the use of hydrogen as
coming years. If generated from renewable energy storage media for hydropower plants in Bhutan.
resources such as sun, wind, and water, hydrogen The paper discusses the feasibility of generating
generation is pollution free. Hydrogen is also being hydrogen using excess electricity available from
considered as a viable fuel for the transport sector, Sengor Hydropower Plant. The paper estimates
which so far is heavily dependent on petroleum the total cost of system (including 100-kW
fuels such as diesel, petrol, liquefied petroleum hydropower plant at a cost of $190 000) to be
gas (LPG), and natural gas. $1424 775. Besides Sengor project, the paper also
Hydrogen can be used directly as a fuel in discusses various options for unelectrified Thanza
modified internal combustion engines or turbines, Hamlet.
either in mixed fuel mode or as a single fuel. Sengor Power Plant is now operational, and
Another technology being developed is hydrogen it has a potential to generate 876 000 kWh per
fuel cell technology. Fuel cells are electrochemical annum. The plant has connected load of capacity
devices that produce electricity from externally 20 kW. Currently, only about 100 000 kWh is likely
supplied fuel (hydrogen) and oxidant (oxygen). to be used in a year (Box 3). It would be interesting
Wind and hydropower technologies are currently to consider hydrogen technology options in near
being evaluated in the US, European countries, future. The Renewable Energy Division of the DoE
Japan, and other countries as electricity sources that can look at this option as futuristic technology
could enable the production of large quantities of development, and a donor-assisted project can
low-cost renewable hydrogen for use in distributed be initiated to study the hydrogen production
generation and transportation. This will facilitate and storage option for future, in conjunction with
the use of hydrogen storage for off-peak storage hydropower plants.
of hydropower. In the context of Bhutan, where It is recommended that a project, which would
hydropower is abundantly available but suffers from evaluate a realistic path for hydrogen production
seasonal variations, hydrogen can be considered as and storage from these two renewable energy
a storage medium to store hydroelectricity, which resources – water and hydrogen – be taken up
is environment-friendly. Although wind power is as a first step. This project could also examine
not being utilized for the commercial production how to integrate this technology in nation’s energy
of electricity, in near future, wind energy resources infrastructure, if found feasible.
can also be exploited for decentralized electricity
and hydrogen production. By 2020, smaller- Geothermal energy
scale stand-alone and/or grid-connected systems Geothermal energy is the heat energy available
serving local transportation fleets and distributed in the core of the earth. The exploitation of
power generation schemes can be envisaged. geothermal energy to meet heat requirements
Indian research organizations have developed and/or produce electricity is common in certain
hydrogen-powered motorcycles and generator sets countries like Iceland, USA, and the Philippines.

CHAPTER
BOX 3 100-KW SENGOR MICRO HYDROPOWER DEMONSTRATION PROJECT

Location
• Sengor, Saling Gewong, Mongar Dzongkhag
Funding
• United Nations Development Programme (UNDP), Global Environment Facility (GEF), and Royal Government
of Bhutan (RGoB)
Implementing agency
• Department of Energy, Ministry of Trade and Industry (presently Ministry of Economic Affairs)
Goals
• Adequate and reliable supply of electricity for the next 20 years for the Sengor Community.
• Reduction of greenhouse gas (GHG) emissions by using hydropower energy instead of burning fossil fuels,
which emits GHGs.
Objective
• To enhance livelihoods
• To alleviate poverty
• To stimulate socio-economic development
• To encourage community-based rural enterprises
Project features
• Sengor is located in the Thrumshingla National Park area and the extension from the available nearest grid is
not environment-friendly. Therefore, there is a need for a stand-alone 100-kW micro hydro system.
• Duration of the project: August 2005–June 2008.
• The total cost for Sengor Micro Hydropower Demonstration Project is $1 065 000.00.
• Community-based micro hydropower project in which the community will take the full responsibility for
operation, maintenance, electricity pricing, and bill collection, along with ensuring the sustainability of the
micro hydro plant in the long run. This will enhance their livelihoods and create a sense of ownership.
• The project will benefit about 57 households, which include the community, social institutions, and national
workforce. Moreover, the project is also expected to benefit daily highway commuters.
Details on the geothermal energy technologies are The study included analysing soil and water
given in Annexure 4.6. sample, studying geology around the area, and
collecting information on medicinal properties of
Geothermal potential and its exploitation in the thermal springs, besides registering medicinal
Bhutan plants en route.
Several hot springs (tsachhus) are known to exist in The study report mentions that the temperature
Bhutan. These occur in two regions—in northern of the spring water ranges between 40 °C and
Bhutan at Gasa, Punakha, upper Trongsa, 50 °C. Highest temperature of 50 °C was recorded
Bumthang, and Lhunetse dzongkhags and in at Chubu Tsachhu, which is located in North
southern Bhutan at Rongkhola and Bhurkhola. East Tsachuphu village and is approachable by
These are traditionally used for bathing, as the motorable road up to Samdinkha from Wangdi
water is believed to have medicinal and healing Phodrang.
properties. In 1996, a reconnaissance study of In short term, it is possible to use hot water
thermal springs and medicinal water springs springs for space heating in the houses in the
(menchhus) in Gasa and Punakha Dzongkahg was vicinity and also in guest houses for tourists, as
carried out by the Geology and Mines Division, a demonstration project. Drying facilities for
Ministry of Trade and Industries (Gyenden agricultural products and medicinal herb can
1996). also be established in the areas around the hot

CHAPTER
springs. These facilities would offer income and Typically, about 10% of the conventional
employment generation opportunities for local petroleum-based diesel is envisaged to be replaced
youths. Moreover, these projects by themselves with bio-diesel. Considering the scale of use of
would become a tourist attraction. The Renewable diesel in the country, Bhutan can directly import
Energy Division can conduct a detailed feasibility bio-diesel blended diesel from India, once the
study in the Tenth Plan. Indian oil companies start supplying the blended
In medium and long term, detailed exploration diesel in sufficient quantities.
and plotting of thermal profiles of the underground
sources, along with the study of geological Natural gas based combined cycle power plant
structures, are required to establish the potential As evident from the analysis of the peak demand
and feasibility for the large-scale use of geothermal in Bhutan and the firm power produced from the
energy in the region for applications like electricity hydropower plant, there will be a gap of about
generation. These studies could be undertaken by 250 MW in power supply during lean season
the Department of Geology and Mines, along with till 2015 when Punasangtchu and Mangdechu
the Renewable Energy Division of the DoE. power plants will get commissioned. To plug the
Further, geological study and exploration of gap between the peak demand and power supply
thermal potential for direct use of geothermal during the lean season of hydropower generation,
energy can be taken up in future. a natural gas based combined cycle power plant
of an approximate capacity of 300 MW in Assam/
WASTE-TO-ENERGY West Bengal is recommended. This plant may
Waste generation is increasingly being associated supply power to India during the summer, and
with human settlement and rapid urbanization, during winter, Bhutan government can utilize all
with the problem of proper management of solid the power generated from it. Salient features of the
waste so generated also showing an upward trend. plant are as follows.
Thimphu and Phuentsholing alone generate
about 37 tonnes and 25 tonnes of solid waste,
Plant capacity 300 MW
respectively, daily, containing a lot of organic matter
Plant efficiency 50%–52%
(Bhutan Energy Data Directory 2005). It has been
estimated that in Bhutan, about 81 119 tonnes Plant load factor 85%–90%
of solid waste is generated annually. If this waste (PLF)
can be used for the generation of energy (either Capital cost Rs 10 500 million
for electricity generation or for supplying thermal Natural gas fuel 447 million m3 per year
energy), besides augmenting the energy supply per required for
se, it would take care of waste management as well. power generation
Bhutan has, therefore, potential to sustain over 3 Cost of fuel $4.2-4.5 per million BTU
MW of power generation capacity. (that is, Rs 8–8.5/m3)
To start with, a biomethanation system of Cost of Rs 4.5-5.5/kWh
capacity 1 tonne/day may be set up in Thimphu as generation
a demonstration plant, treating its organic waste,
including that generated from hotels and vegetable This project, which can be installed on the Indian
market. side as a joint venture will offer the following
FOSSIL FUELS advantages.
# Lean power shortage is eliminated.
In the absence of petroleum reserves in the country,
# Bhutan’s energy security issue is addressed due
Bhutan meets its requirement of the petroleum
to the diversity in fuel for power generation.
fuels – diesel, petrol, kerosene, and LPG – through
Since currently, the majority of electricity is
imports from India.
generated by two hydropower plants, which

CHAPTER
incidentally, are on same river and are run-of- the main source of power in Bhutan for a long
the-river type with limited storage. time to come. However, for faster development
# Industries can pay higher charges during winter of hydropower plants, involvement of the private
for assured power supply. sector as equity partner or IPP or captive power
# Gas power plant can respond faster to change producer is essential. It is essential to develop
in demand. small- and medium-sized hydropower plants on
# Natural gas being a relatively cleaner fuel, the fast track mode so as to avoid power shortages,
pollution impact is negligible. especially in winter, with appropriate incentives
# The gestation period is small (about two years); and financial packages for IPPs.
hence, it is a quicker and ideal solution Other renewables can play an important but
limited role in electricity generation. However,
Only barrier for this project could be the availability the establishment of demonstration plants using
of natural gas. biomass, small wind, solar photovoltaic, and
municipal solid waste should be considered to
Coal develop diverse resources, distributed generation,
Coal is primarily used in industries. The overall and energy security.
contribution of coal in the energy supply mix is Energy-intensive industries could be encouraged
only about 8%. Efficient technologies for coal to set up captive power plants to achieve twin
utilization can be promoted. Locally produced goal of employment generation and industrial
coal is mainly used for reduction processes in development without hampering the export of
the industries. Coal-based power plants are not electricity or supply of electricity to the citizens of
envisaged for following reasons. the country.
# Locally available coal is of poor quality and is The DoE could take up a study to prepare
available in limited quantity. detailed feasibility report for setting up a solar
# Large hydropower potential is available. photovoltaic silicon cell and wafer manufacturing
# A coal plant may be useful for improving industry in near future. Hydrogen and geothermal
firm power, but it is not essential if medium energy can be explored as futuristic options.
hydropower plants are installed in next four to The potential of biomass for thermal applications
five years. in small-scale industries and for processing agro
products can also be explored.
CONCLUSION Cheap and renewable hydroelectricity can be
The above analysis clearly shows that being effectively used in the transport sector, which is
cheapest and pollution free, hydropower will remain an environment-friendly option.

CHAPTER 5
Demand side efficiency enhancement

or energy demand management
E
nergy demand management or demand can be achieved by adopting one of the following
side efficiency enhancement strategies strategies.
fundamentally aim at optimizing the 1 Improving the overall efficiency
use of energy delivered through end-use 2 Using modern or renewable energy sources
efficiency enhancement, demand side management 3 Developing energy-efficient housings/buildings
practices, and reduction in waste and unnecessary
use, thus substantially increasing the ‘net’ energy Improvement in the overall efficiency
available to end-users. In the residential sector, the improvement in
Taking clue from the projected energy the overall efficiency of the appliances used for
consumption and predicted fuel mix for each cooking, space heating, and lighting will reduce
sector, an attempt has been made to carry out an the fuel consumption. The strategies for the
analysis, by sector, and prioritize various strategies improvement in the overall efficiency in the fuel
for demand side efficiency enhancement, along and energy consumption are as follows.
with the promotion of eco-friendly fuels and
renewable energy resources so as to evolve a long- Strategy 1: Promotion of improved cook stove
term strategy. Goal
The main aim of this strategy is to reduce fuelwood
RESIDENTIAL SECTOR
consumption for cooking and space heating in
The residential sector mainly consumes fuelwood, rural households.
kerosene, liquefied petroleum gas (LPG), and
electricity. Approach
As discussed earlier, fuelwood accounts for more Reduction in fuelwood consumption can be effected
than 90% of the sector’s energy demand, and at the through awareness campaign and promoting
same time, fuelwood devices are hardly 10%–15% fuel-efficient cook stoves and bukharis. Eleven
efficient. Fuelwood is mainly used for cooking, Dzongkhags – Dagana,Wangdue, Mongar,Tsirang,
space heating, and lighting. Similarly, kerosene is Haa, Trashiyangyse, Trashigang, Pemagatshel, and
the most widely used fuel for lighting purpose in Sandrup Jongkhar – that have highest per capita
the residential sector. According to Census 2005 fuelwood consumption and house more than 48%
of Bhutan, about 46 064 households use kerosene of the rural population can be targeted in the
for lighting, while about 4502 households use Tenth Plan.
fuelwood, candle or other resources for lighting. Giving subsidized electric cook stoves can also
Hence, there is a need to put in place strategies be considered a strategy in these Dzongkhags.
for cutting down fuelwood as well as kerosene Most of these Dzongkhags are located in
consumption in this sector. Reduction in the central and eastern regions, which are mostly
consumption of fuelwood and kerosene as well underdeveloped.
as in the total residential energy consumption

CHAPTER
5 DEMAND SIDE EFFICIENCY ENHANCEMENT OR ENERGY DEMAND MAN AGEMENT
However, given the fact that about 69 000 Recommendations

households (37%) still use fuelwood for cooking A programme for supplying about 500–1000
and space heating, it is important to have an cook stoves on demonstration basis can be
ambitious programme on the distribution of initiated in the Tenth Plan. These cook stoves
efficient cook stoves in Bhutan. The United can be distributed through subsidy programmes
Nations Development Programme (UNDP) office by renewable and natural resource centres. The
in Bhutan had earlier supported improved cook Agriculture Machinery Centre (AMC) can be the
stove programme, but such activities were not focal agency for manufacturing and distribution
supported on a long-term basis. It is important to of these stoves.
carry out this programme on a sustainable basis
and for a longer period. Strategy 3: Promotion of CFLs, LED lamps,
and other energy-efficient lighting fixtures in
Recommendations electrified areas
It is recommended that a target of about 20 000 Compact fluorescent lamps (CFLs) are efficient
improved cook stove installations in households and effective in saving electricity used for lighting.
can be set under the programme. A nationwide Bhutanese households commonly use electric
awareness campaign can also be undertaken. bulbs for lighting. Replacement of these bulbs
The Department of Energy (DoE) can with CFLs can save as much as 80% of electricity
implement the programme with the help of NGOs used for lighting. Apart from CFLs, new types of
such as Tarayana Foundation and Royal Society efficient tube lights and lighting systems based on
for Protection of Nature (RSPN). light-emitting diodes (LED) are also available in
Monitoring of fuelwood consumption in the market.
selected villages before and after implementation
can indicate the impact of the programme. Goal
The main goal is to reduce the energy consumption
Strategy 2: Use of improved cook stoves for in the electrified areas by introducing energy-
fodder cooking efficient lighting systems.
The Integrated Energy Management Master Plan
(IEMMP) survey has estimated that about 26% Approach
of the energy consumed in the residential sector is One approach is the promotion of CFLs and energy-
used for fodder cooking in rural areas. Most of the efficient lighting through awareness campaign. For
fodder cooking is being done using conventional areas having off-grid hydropower plants, supply of
three-stone cook stoves. CFLs through subsidy/cost sharing scheme can
Since fuelwood is available free of cost, also be considered. Similar experimental scheme
alternative fuels such as LPG or electricity were implemented by the DoE and the Bhutan Power
not used for fodder cooking activities. Corporation (BPC) in Ura Micro Hydro Power
Project area in 2005 has shown good success.
Goal
Reduce fuelwood consumption for fodder cooking Recommendations
by improving efficiency. In Thimphu/Phuentsholing and other urban areas,
introduction of the CFL under promotional
Approach scheme for replacing bulb can be undertaken by
Improved cook stoves can be supplied free of cost the BPC. Certain number of CFLs, say four per
through Dzongkhag offices, for fodder cooking. households, can be provided to each consumer,
Specially designed turbo cook stoves developed by and the cost of the same can be recovered through
organizations such as The Energy and Resources electricity bills.
Institute (TERI) can be tried on a demonstration Promotion of 36-watt tube light instead of 40-
basis. watt tube lights is also being considered under

CHAPTER
DEMAND SIDE EFFICIENCY ENHANCEMENT OR ENERGY DEMAND MAN AGEMENT 5
the South Asia Regional Initiative for Energy LPG cook stoves in Bhutan. As mentioned in
programmes. Similarly, schemes for promotion of Chapter 3, efficiency improvement of 5% over and
energy-efficient lighting can also be taken up. above the efficiency of currently available LPG
cook stoves is possible.
Use of modern fuel and renewable energy
sources Strategy 5: Use of briquettes and pellets for
space heating
Strategy 4: Promotion of efficient LPG stoves
Briquettes made from saw dusts are now available
LPG is a modern cooking fuel, causing less
in Thimphu region, which are mainly supplied
pollution. It is an efficient burning fuel and is easy
through briquetting plant set up by the Natural
and convenient to use.
Resources Development Corporation (NRDC).
Use of LPG as cooking fuel is common in urban
Similar briquetting plants can be installed at other
areas. However, in rural areas, LPG is still not a
places so that briquettes are available in most parts
preferred fuel due to the following reasons.
of the country. Further, small pellets made from
# High cost mainly due to high transportation
sawdust and forest waste can be used for space
costs
heating. Pellet manufacturing is a major industry
# Limited availability
in Europe, and sophisticated pellet stoves are also
# Difficulty in transporting it to the households.
available.
Goal
Goal
Replacing fuelwood with LPG and efficient use of
The strategy is to reduce fuelwood consumption
LPG by introducing efficient LPG cook stoves.
for space heating.
Approach
Approach
Small LPG cylinders that are easy to transport can
Pellets and briquettes can be produced from saw
be introduced. Figure 1 depicts a woman carrying
dust and forest wastes. Pine needles and other forest
LPG cylinder. Simultaneously, energy-efficient
waste can be effectively used for manufacturing
LPG cook stoves can also be introduced.
pellets.
Recommendations
Recommendations
It is expected that LPG consumption is likely
Small-scale saw dust should be introduced along
to increase by three to four times by 2020.
with forest waste briquetting and pelletizing in
Introduction of standards and labelling system for
various towns of the country. Simultaneously, new
LPG cook stove can help in introducing efficient
energy-efficient pellet stoves and boilers should
also be introduced in towns.
Strategy 6: Promotion of solar lanterns and

home lighting systems in unelectrified areas
Proper lighting is the basic requirement in a
modern society. It is not only important from
health point of view but is also essential for socio-
economic development, as it gives an opportunity
to people to extend their working hours and also
enables students to study for longer period. People
can carry on with their day-to-day activities even
after sunset.
According to the Census 2005, there are about
FIGURE 1 A WOMAN CARRYING LPG CYLINDER 46 064 households that use kerosene as a primary

CHAPTER
source of lighting and about 4502 households that available in various models and sizes. The DoE
use fuelwood, candle or other resources for lighting. has been working with some organizations like
Figure 2 shows the percentage use of fuels for Barefoot Engineer College, Tilonia, India, for
lighting purpose in households in Bhutan. training rural youth in installation and operation
and maintenance (O&M) of these systems. About
Goal 300 rural women were trained recently under
To reduce the use of imported kerosene as well as an Asian Development Bank (ADB)-funded
to reduce indoor pollution and provide improved programme.
lighting to rural unelectrified households. Promotion of solar lantern and/or solar home
lighting systems as an interim solution for lighting
Approach can be done in two ways.
Though all households will eventually be 1 Direct sale Direct sale of solar lanterns and
covered under rural electrification programme, home lighting systems to individual households
an immediate and intermediate solution can under subsidy scheme can be promoted through
be providing solar lighting systems and solar the Dzongkhag offices or the Bank of Bhutan
lanterns. or Bhutan Development Finance Corporation
(BDFC) or Renewable Natural Resource
Recommendations
(RNR) centres.
Solar lanterns are designed to provide quality light
2 Solar women entrepreneur scheme Solar
for about two to six hours. Solar home lighting
entrepreneurs, especially women, can be
systems are typically designed with two to four
groomed, who can set up charging stations
CFL tube lights and an additional point for small
for charging solar lanterns during daytime and
radio or TV.
rent them to users during night-time. However,
Both these products are commercially available
the scattered nature of village households and
in the international and local markets. They are
FIGURE 2 SOURCES OF LIGHTING IN HOUSEHOLDS (CENSUS 2005)

CHAPTER
mountainous terrain may affect the efficacy of installation is high due to geographical reasons
such schemes. The Renewable Energy Division and small market size.
of the DoE is already in the process of training
rural women on solar home lighting systems Recommendations
as ‘barefoot engineer’ from Barefoot College, The DoE has already carried out initial studies
Tilonia, and Rajasthan, India. These women on solar water heating systems for institutional
can be further trained to run small business of consumers. The studies have established the fact
renting solar lantern. that these systems are workable, but the costs are
very high. Moreover, electricity and fuelwood – two
Simultaneously, the use of kerosene wick lamps most commonly used fuels for water heating – are
should be discouraged through awareness very cheap. Therefore, following suggestions are
campaign. made for promoting solar water heating systems.
Solar home lighting systems are already being # Initially, solar water heating systems can be
promoted in Bhutan under different funding promoted in urban areas through awareness
programmes. Most of these are promoted in campaign. Special soft loans can be made available
rural areas that fall under protected forest areas. to interested users through the BDFC.
Recently, proposed draft Renewable Energy Policy # The DoE may also offer a rebate on monthly
by the DoE envisaged supply of solar home electricity bills for those users who have installed
lighting systems to 3018 households for off-grid solar water heating systems.
electrification. The same scheme can be extended # Similarly, a rebate may be given on annual
to the households in rural areas, where electricity is municipal/property taxes to commercial and
not likely to reach for another four to five years. institutional buildings with solar water heating
systems.
Strategy 7: Promotion of solar water heating
systems Specially designed smaller and lighter systems
Water heating is another end use application in using plastics can be installed on demonstration
Bhutan, which consumes a lot of energy. Water is basis.
heated mostly in kitchen or by using bukharis.
Solar water heating systems have proved their Strategy 8: Use of hydrogen as a cooking fuel
effectiveness in saving electricity and other fuels In future, the potential of hydrogen production
that are used for heating water. using hydropower to store surplus hydro energy
can be explored. A pilot study and a pilot plant
Goal for hydrogen production and storage have been
The main goal under this strategy is to introduce suggested elsewhere in this report. Use of hydrogen
solar water heating systems to save electricity and for cooking can be explored at a later stage. Issues
fuelwood. such as costs and safety need to be addressed
before this technology can be recommended for
Approach large-scale use. Figure 3 shows a hydrogen cook
In Bhutan, initial studies carried out by the DoE stove developed by Banaras Hindu University,
through Austrian consultants have shown that Varanasi.
these systems may not be cost-effective. TERI team The Ministry of New and Renewable Energy
carried out an analysis of solar water heating system (MNRE), Government of India, has been funding
with the help of RETScreen software by using various research programmes on hydrogen
cost details provided by the local solar system technology development. Some of the technologies,
supplier. The analysis showed that subsidy and such as hydrogen-based motorcycles, can be tested
soft loans are required for making solar system in Bhutan in future.
attractive, and the cost of transportation and

CHAPTER
A detailed note on energy conservation in the

buildings in Bhutan is given in the subsequent
section.
Energy conservation in buildings in Bhutan

Design concept of eco-housing and eco-friendly
building ensures the following.
# Overall site planning and design of building
architecture have coherence and integration
with the surroundings.
# All buildings are oriented and designed for
energy efficiency and use natural climatic
FIGURE 3 HYDROGEN COOK STOVE DEVELOPED BY conditions to reduce energy consumption by
BANARAS HINDU UNIVERSITY, VARANASI adopting passive solar design concepts.
# Conservation and efficient use of natural
Development of energy efficient housings/ resources such as rainwater available at site are
buildings ensured.
# Renewable energy is used, such as using solar
Energy consumption for lighting and space heating
energy for water heating and space heating, using
can be reduced by using suitably designed houses
biogas for cooking, and using other renewable
and buildings. Eco-friendly housing designed to
energies, wherever applicable.
reduce heat loss and use daylight for internal lighting
# Eco-friendly, low-embedded energy materials,
is effective in reducing the energy consumption
and energy saving building materials are used.
for space heating and lighting. A brief note on
# Energy-efficient technologies and appliances
energy conservation techniques in the buildings is
are used to reduce energy consumption in the
presented in Annexure 5.1. Following strategy is
building. For example, using heat pumps for
suggested for the introduction of energy-efficient
space heating and cooling, using insulation in
housing in Bhutan.
walls and roofs for reducing heat loss, and using
energy-efficient lighting fixtures.
Strategy 9: To introduce energy-efficient
housing in Bhutan
Bhutan has developed its own traditional housing
Goal
and building design guidelines, which are being
The goal of this strategy is to introduce energy-
followed strictly.
efficient buildings in Bhutan.
Traditionally, locally made mud bricks and
traditional housing construction techniques using
Approach
bamboo and mud are still used in rural areas.
The energy-efficient building designs can be
However, in urban areas, the practice of using
introduced initially for new housing complexes
cement and concrete for construction, and using
being developed by government agencies
galvanized iron (GI) sheets for roofing material is
Recommendations prevalent.
External expert agencies can be initially involved In the context of Bhutan, following are the
in developing designs. This can be simultaneously recommendations to develop and adopt eco-
followed by organizing capacity building training friendly and energy-efficient housing codes and
courses for architects and builders. The DoE can concepts.
develop such courses jointly with the Government # National-level awareness programmes and
of India and government agencies like Bureau of capacity-building programmes for common
Energy Efficiency (BEE). citizens and architects need to be developed.

CHAPTER
# Collaborative programmes with other agencies, $ Infiltration should be controlled by having

especially with the government agencies like the concrete cornices for windows.
BEE, can be undertaken to develop database
for weather data, best practices, design norms General recommendations
for Bhutanese weather conditions, alternative Since capital cost of energy-efficient/renewable
materials, and so on. energy devices is a major barrier in adopting
# Materials like bamboo and mud walls need to them, a common loan scheme for energy-
be analysed and documented. efficient/renewable energy devices can be taken
# The use of bamboo and its products for into consideration. This loan scheme can provide
buildings, such as mats for walls and bamboo- loans on convenient terms to individuals for the
based roofing materials, can be explored. purchase of energy-efficient/renewable energy
Currently used GI sheet roofing material can devices certified by the DoE. Till the time such
be replaced with bamboo mats. labelling facilities are developed in the country,
# Workshops for architects and construction energy/star-labelled energy-efficient devices as well
agencies to sensitize them on energy conservation as those renewable energy systems that conform
and energy efficiency in buildings should be to international standards may be endorsed by the
conducted. DoE for use in Bhutan.
# Agencies like Standards and Quality Control Small isolated houses can explore small wind
Authority (SQCA), National Housing machines and small solar photovoltaic (PV)
Development Corporation, Construction power plants for providing electricity to the
Association of Bhutan, National Environment households. Wind/solar hybrid pumps can be used
Commission, Ministry of Works and Human in farmhouses.
Settlement, and Urban Development
Department can work together towards COMMERCIAL AND INSTITUTIONAL SECTOR
developing energy-efficient buildings. The commercial and institutional sector comprises
# Some specific recommendations that can be four major types of consumers as far as energy is
considered are as follows. concerned
$ Longer façades should face the north–south 1 Bulk users like armed forces, monastic bodies,
direction. schools, hospitals
$ Spacing between buildings should take into 2 Tourism activities
account winter sunpath and should get 3 Commercial offices
maximum radiation on south glazing for 4 Small shops
direct solar space heating.
$ Spaces that are occupied during the day time Bulk users use energy for cooking, water heating,
in residential units should face south side. lighting, and space heating, while shops and
$ Night-time spaces should be located on the commercial offices use energy mostly for lighting,
north side, with thermal insulation on the space heating, and running other appliances like
north wall. computers and printers. Most commonly used
$ Insulation is also recommended for the walls fuel in these sectors are fuelwood for cooking and
on the east and west sides. water heating, mainly by bulk users, monastic
$ There should be double-shuttered double- bodies, schools and hospitals, and so on, and
glazing windows. electricity for lighting and heating, mainly by the
$ Heaters with timers should be used for hotel industries and commercial offices. Following
different heating set points for day and night paragraphs describe the strategies that can be used
operations. for the reduction in the demand for fuelwood and
$ Glazing should be on the south wall, with kerosene and can be helpful in saving electricity.
internal low ‘e’ glass.

CHAPTER
# Promotion of use of energy-efficient However, these electric cookers by themselves are

appliances not ISI marked, and efficient electric cook stoves
# Use of modern fuel and renewable energy need to be promoted.
sources In urban areas where LPG and electricity are
# Development of energy-efficient buildings available, the use of efficient LPG cook stoves,
and electric rice cookers and curry cookers is
Promoting the use of energy-efficient recommended.
appliances Turbo cook stoves, or wood gas cook stoves,
Strategy 10: Use of energy-efficient cook can be introduced in the institutional segment.
stoves and other devices for cooking Canada International Agency (<http://www.
Army units, monastic bodies situated in remote acdi-cida.gc.ca/CIDAWEB/acdicida.nsf/ En/STE-
areas, and schools with hostels use fuelwood-based 320162243-T98>) also distributed efficient cook
cook stoves for cooking. stoves in schools in Bhutan. Such projects can be
Wood-fired water-jacketed cook stoves, taken up more aggressively through coordinated
commonly known as Althaps, which are produced efforts for effective distribution, efficient after-
locally, are found to be used in many places. sales service, and post-project monitoring.
These were developed under the UNDP-funded
Strategy 11: Promotion of CFL and other
projects.
energy-efficient lighting fixtures in
Goal commercial buildings
Goal of this approach is to promote the use of CFLs are efficient and effective in saving
energy-efficient cook stoves for these institutions. electricity that is used for lighting. Commonly
used appliances are electric bulbs for lighting.
Approach Replacement of these bulbs with CFLs can save
Reduction in fuelwood consumption can be as much as 80% of electricity used for lighting.
encouraged through awareness campaign and Box 1 gives the comparison of an 11-W CFL and
promoting fuel-efficient cook stoves and bukharis. a 60-W incandescent lamp.
Recommendations Goal
The World Wide Fund for Nature (WWF) was The main aim is to reduce energy consumption
recently engaged in promoting electric rice and in the commercial and institutional sector by
curry cookers for institutional users. These cookers introducing energy-efficient lighting systems.
have shown good potential for saving fuelwood.
BOX 1
A COMPARISON OF A 60-W INCANDESCENT LAMP WITH AN 11-W

COMPACT FLUORESCENT LAMP (CFL)
Lamp characteristics CFL (11 W) GLS (Incandescent lamp)
Lamp wattage (W) 11 60
Lamp life (burning hours) 10 000 1000
Colour temperature (CCT °K) 2700 2700
Lumen output (Lumens) 900 720
Lumen efficacy (Lumens/watt) 81.8 12
Colour rendering index (CRI) 82 100
Energy saving 60% —
Simple payback periods (months) 2 to 3 —

CHAPTER
Approach Use of modern fuel and renewable energy

One approach is promoting CFLs and energy- sources
efficient lighting through awareness campaign.
Strategy 13: Promotion of dish-type solar
Providing CFLs through subsidy/cost-sharing
cookers
scheme can also be considered.
Dish-type solar cooker may be promoted in
Recommendations the monastic bodies, schools/colleges hostels,
In Thimphu/Phuentsholing and other urban areas, hotels, and so on, where large-scale cooking is
introduction of the CFL under promotional required. This will help in reducing the fuelwood
scheme for replacing bulb can be undertaken consumption for cooking.
under an appropriate programme launched by the
Strategy 14: Promotion of solar water heaters
DoE through a designated department.
Solar water heaters are the most useful devices for
Energy audit may be made compulsory for big
saving fuelwood as well as electricity, which are
hotels, commercial complexes, and institutions.
being used for heating water in most of the hotels
This will motivate the users to switch to the use
and institutions. These institutions can be provided
of energy-efficient CFL lights and other electrical
with special incentives to install solar water heating
fixtures.
systems to meet their hot water requirement.
Strategy 12: Introducing energy efficiency in Although there are hindrances to installing solar
the hotel industry water heaters, such as low cost of electricity and
The hotel industry is an integral part of the tourism lack of required infrastructure, know-how, and
industry. Energy efficiency measures focused on service network, the DoE can promote the use
hotel industry would go a long way towards eco- of solar water heaters by undertaking awareness
tourism and energy savings. campaigns, highlighting their environmental
Hotels in Bhutan vary from simple lodges to five- benefits, providing incentives to the user, and
star hotels built by international groups. Typically, making them compulsory for large hotels.
hotels in Bhutan have about 20–30 rooms. The
Strategy 15: Promotion of solar PV and small
tourism department has planned to develop and
wind-based power plants
upgrade facilities of the existing hotels to three- or
Solar PV based power plants and small wind-based
four-star grade.
power plants may be promoted in institutions,
Use of energy-efficient LPG cook stoves and
especially monasteries and schools. This will
lighting fixtures will reduce the total energy
reduce the dependency on hydropower, especially
demand of the hotels.
in winter when the power from hydro system
Recommendations become less. This solar PV and small wind-based
# Energy auditing can be made mandatory for
plants will also help in electrifying the rural area
hotels having a minimum of 20 rooms. The where grid electricity has not reached.
DoE can provide the auditing support.
Development of energy-efficient buildings
# These hotels can be asked to submit the details
of energy consumption to the DoE on an annual Energy consumption in buildings can effectively
basis. Over a period of time, norms for energy be reduced by suitably designing the buildings.
consumptions can be developed for the hotel The DoE may promote the development of eco-
industry. friendly buildings, which are designed to reduce
# Hotels can be encouraged to adopt energy heat loss and use daylight for internal lighting.
efficiency through star rating systems.

CHAPTER
Strategy 16: Introduction of energy efficient Impact/energy saving potential

commercial buildings The Long-range Energy Alternatives Planning
Goal (LEAP) analysis has shown that implementing
The main aim of this strategy is to introduce these measures will save approximately 10% of
energy-efficient commercial buildings in Bhutan electricity in future.
Approach Implementation strategy

New office buildings of Royal Government of The DoE has established an energy laboratory under
Bhutan can be made energy efficient on the lines the IEMMP project. The laboratory facilities and
of the new building of the DoE. This design can the infrastructure available with the Department
be extended to other institutions also. of Industries on Training and Capacity Building
can be used to develop training and energy audit
Recommendations programmes for small-scale industries
An energy-efficient building code for Bhutan may The programmes can be developed for specific
be developed, and it should be incumbent on types of industries such as textile, paper, food
hotels and big institutions buildings, including the processing, and so on.
commercial office buildings, to follow this code as
per the building category. To generate awareness Barriers
on these energy-efficient buildings, the DoE may Small-scale industries may find investments
organize some training courses for the owners in energy efficiency equipment an expensive
of the buildings, builders, and the government proposition. Lack of awareness is one of the
department. reasons for not using efficient devices.
Demand side management in new industries
INDUSTRIAL SECTOR should be followed diligently for reducing the total
The industrial sector mainly consumes electricity, demand for energy.
fuelwood, furnace oil, and coal. The country’s
growth is based on the industrial growth, which Energy demand reduction strategies, by
is taking place at a rapid pace. Because of this industry
growth, energy consumption in the country, as Ferro alloys
discussed in Chapter 3, is enormous. To reduce From earlier analysis, it is observed that the
energy consumption in the industrial sector, specific ferro alloy industry is one of the most energy-
strategies for different categories of industries are intensive industries in Bhutan and a significant
required. As Bhutan has good potential for electricity consumer of electricity. This industry accounts
generation and is dependent on the import of fuels for more than one-third of the domestic electric
like furnace oil and coal, it is necessary to reduce consumption. So, even a small saving can indeed
the consumption of fuelwood, coal, and oil by make a significant difference to total electricity
the industries. The strategy for fuel consumption scenario for Bhutan. The largest ferro alloy plant
reduction in the industries is as follows. in Bhutan is the Bhutan Ferro Alloys Ltd (BFAL).
However, a number of such units are expected
Strategy 17: Promote the use of energy- to come up by 2008. It is recommended that
efficient equipment and technologies in energy-efficient technologies be used extensively.
small- and medium-scale industries Some technological and application-based
Goal recommendations are as follows.
The main aim of this strategy is to improve energy # Use of pre-heated (up to 950 °C) charge in a
efficiency and reduce energy consumption as specially designed reactor (such as rotary kiln/
well as pollution in the small- and medium-scale vertical shaft furnace) can bring down the specific
industries power consumption to less than 3000 kWh.

CHAPTER
These reactors can also be converted to Cement industry

reduction reactors for supplying pre-reduced The cement industry is poised to play a big role
manganese ore to electric smelting unit. in meeting Bhutan’s major infrastructural need
# Use of hot pre-reduced ore from the above in the coming years. As mentioned earlier, the
reduction reactors (rotary kiln/vertical shaft cement industry is an energy-intensive industry
furnace) integrated to smelting unit can bring in which electricity and coal form major inputs
about a drastic reduction in specific power to production. Process optimization, load
consumption (around 2000 kWh). management, and operational improvement can
# Although it is possible to run the electric furnace lead to significant energy saving, and although it
with an MnO content of the slag as low as 15%– involves marginal financial investment, it is found
16%, it would mean high slag basicity, high to have encouraging results in energy saving. These
power consumption, and high fume losses. include the following.
# For producing low phosphorus (less than 0.20%) # Plugging of leakages in kiln and pre-heater
ferro-manganese, calcium oxide/barium oxide circuit, raw mill, and coal mill circuits
(CaO/BaO)-based flux is recommended for the # Reducing idle running
dephosphorization of liquid high carbon Fe– # Installing improved insulating bricks/blocks in
Mn. But the melt will have to be desiliconized kilns and pre-heaters
to less than 0.20% Si before dephosphorization. # Utilizing hot exit gases in an efficient manner
Injection of Ca–Si cored wire in the melt can # Optimizing cooler operation
reduce phosphorus in liquid ferro-manganese # Optimum loading of grinding media/grinding
to less than 0.15%. Laboratory investigations mill optimization
have been completed for optimizing parameters # Rationalizing compressed air utilization
such as composition of the reagent, amount to # Redesigning of raw mix
be added, effect of variation in silicon contents, # Installing capacitor banks for power factor
treatment temperature, and treatment time. It improvement
is worth mentioning that for 0.10% decrease in # Replacing over-rated motors with optimally
phosphorus, the premium obtained is around rated motors
Rs 500 per tonne of ferro-manganese. # Optimizing kiln operation
# The use of partially burnt coal (jhama) as a # Changing from flat belt to V-belt
partial substitute to coke needs to be looked
into and tried in actual practice, as it is expected Use of energy-efficient equipment gives very
to increase the charge resistance. encouraging results even at the cost of some capital
# Annual energy auditing can be made compulsory, investment. The energy-efficient equipment that
as it helps to identify the under/overutilization of can be used by the cement industry are highlighted
machineries, leading to increased consumption below.
of energy, particularly electricity. # Slip power recovery system
# Use of energy-efficient technologies in new # Variable voltage and frequency drive
plants with soft loan/tax credit to cover part of # Grid rotor resistance
additional expanses can be made mandatory. # Soft starter for motors
# High efficiency fans
Units violating the rated norms can be fined # High efficiency separators
based on the degree of violations. Regular training # Vertical roller mill
programmes can also be made mandatory for plant # Pre-grinder/roller press
officials, which will help them use energy efficiently # Low pressure pre-heater cyclones
and also provide them with latest information on # Multi-channel burner
state-of-the-art technological developments. # Bucket elevator in place of pneumatic
conveying

CHAPTER
# Fuzzy logic/expert kiln control system DRI from DRI reactor to EAF. These systems
# Improved ball mill internals include mechanical conveyors, transport vessels
# High efficiency grate cooler (rail or truck), and pneumatic conveying systems.
There are two primary benefits of hot charging of
Active participation of employees in energy DRI to an EAF: (1) lower energy consumption
conservation efforts has been very fruitful in for melting and (2) increased productivity due to
India (National Council for Cement and Building shorter tap-to-tap time. The energy savings occur
Materials). The suggestion box schemes, quality because less energy is required to bring DRI to
circles, brainstorming sessions, and cash rewards melting temperature. As a thumb rule, power
for good suggestions are some of the schemes the consumption can be reduced by about 20 kWh/
plants can adopt for ensuring active participation tonne of liquid steel for each 100% increase in the
of employees. Setting up of an energy conservation composite charge temperature. Also, in addition,
cell for monitoring and controlling energy there is saving in electrode consumption to the tune
performance of the plant is gaining importance of 0.004 kg/kWh due to its linear relationship with
in the Indian plants. Cement units can also train power consumption. At 80% hot DRI charging,
manpower, as has been done in the Indian cement the savings in electrode work out to be Rs 50 per
manufacturing companies. Industry audits should metric tonne (PMT) at current electrode prices.
be made mandatory, and as mentioned earlier, Some specific measures that can be adopted are
there should be provisions for imposing fines for as follows.
violations against non-compliance. # Effectively utilizing free space post combustion
# Scrapping pre-heating system
Iron and steel
# Using hot runner and riser
A number of licensed industries are expected
# Insulating pit for hot empty ladles
to come up in Bhutan. Iron and steel plants
# Converting spout tapping to submerged
will constitute a significant number, with some
tapping
specializing in iron re-rolling, while others in the
# Using hot metal in EAF
iron and steel making. The globalization of the
# Blowing lime fires into EAF
steel industry has ushered in a new era of cost-
# Using supersonic oxygen blowing
competitiveness. The steel industry is the single
# Sliding gate system in EAF tap hole
largest energy consumer, accounting for about 4%
# Placing ladlehood in ladle furnace station
of the world’s energy consumption. The energy
# Continuous DRI/HBI charging
used is a major cost factor for the steel industry.
# Post combustion system
In developed countries, cost of energy is between
# Insulating pit for hot empty ladle
15% and 20% of the overall cost of production. In
# Modifying ladle cover and reduction in cover
India, it is between 30% and 33%, and for Bhutan,
height
it is close to 40%. In the steel industry, the greatest
# Using submerged tap hole
saving in energy is achieved through improvement
# Using hot metal
in technologies used for manufacturing iron and
# Modifying ladle cover for online wire feeding
steel. In the current route, through direct reduced
# Changing mix optimization
iron (DRI) to electric arc furnace (EAF), first
# Ladle in circulation
cold DRI/hot briquetted iron (HBI) is produced
# Using ladle pre-heating system
at ambient temperature, and this is then fed to EAF
# Using evacuating system
to produce steel. This involves loss of substantial
# Using post-combustion technology
energy due to multiple heating and cooling. So,
# Using foamy slag practice
there is a potential for saving energy by utilizing
# Using lime as flux
the energy technology and process of steel making.
# Measuring finished bath temperature
Various scrap pre-heating technologies are now
# Using crucible and riser
available and have been designed to convey hot

CHAPTER
As reported by MECON India Ltd, by Strategies for surface transport, which are put
implementing some of the ECOs (energy forth in the policy, include the following.
conservation opportunities), some selected steel # Improving rural access and inter-connection
plants based on electric arc furnace and induction among Dzongkhags
furnaces have reported significant reduction in # Exploring alternate modes of transport
energy consumption. # Enhancing safety and traffic management
The demand side management in industries system
is effectively done by adopting energy efficiency # Improving frontline services
measures and promoting energy-efficient # Promoting the use of public transport
technologies. The energy audits carried out by # Promoting regional cooperation in transport
TERI during the IEMMP project have shown that
industries have the potential to save energy. ‘Good Governance Plus’ recommends eco-friendly
Ferro-silicon plants in India have reported mass transport system in the major urban areas.
more efficient performance than that reported Petrol and diesel are the two fuels that are used
by the Ferro-silicon Company in Bhutan. The in the transport sector in Bhutan. The country
advanced technologies can be introduced in new imports both these fuels, and over a period of time,
companies. there is an increasing trend in their consumption
Awareness programme, along with support for levels. Diesel imports were 51 460 kilolitres in 2005,
energy audit, can be adopted as a strategy for of which a substantial proportion (about 49 197
the industrial sector. Similarly, industry-specific kilolitres) was used in the transport sector alone.
energy efficiency measures can be suggested for The imports for petrol stood at 13 795 kilolitres
most small- and medium-scale industries after in 2005, which was mainly used for transportation.
energy audit. At present, alternative fuels such as natural gas,
Industries like wood and steel milling industries electricity, and LPG are not used in Bhutan.
can be specifically targeted by conducting energy Bhutan has no vehicle manufacturing facilities,
audit. Replacement of motors and use of energy- and all vehicles are imported. Majority of vehicles
efficient lighting are two major energy measures are imported from India, Japan, and Korea.
for these small units. Import of vehicle is increasing as the economy is
progressing. The number of different categories
TRANSPORT SECTOR of motor vehicles imported in Bhutan in 2005 is
The transport sector in Bhutan comprises road and given in Table 1.
air transport. Bhutan’s transport sector contributed
16% to the overall gross domestic product (GDP)
Table 1
at the end of the Eighth Five-year Plan (1997–
IMPORTS OF DIFFERENT CATEGORIES OF MOTOR
2001). The development strategy for the transport
VEHICLES (IN NUMBER)
sector in Bhutan aims at achieving a number of
milestones, as articulated in a comprehensive vision Vehicle category 2000 2001 2002 2003 2004
statement of Bhutan’s future (Bhutan 2020: A Vision Passenger cars 1807 2270 1533 1457 1363
of Peace, Prosperity and Happiness). These milestones Two-wheelers 629 673 303 299 785
include (1) 75% of rural population living within Buses 20 3 11 0 0
half-day’s walk from nearest road, (2) national Trucks 108 331 234 188 180
trunk roads upgraded to take 30-tonne lorries, and
Others 44 62 182 542 80
(3) completing second transnational highway.
The vision of Bhutan’s NationalTransport Policy Source MoF (2005)
is to ensure ‘access to quality transport services by

all, taking into consideration the requirements of Currently, vehicles are concentrated in Thimphu,
a landlocked country’. Paro, and Phuentsholing area, where more than
80% vehicles are registered.

CHAPTER
In future, petrol and diesel will remain the encourage the use of fuels of certain specifications,
dominant fuels. which also contain low percentages of pollutants.
In case of Bhutan, the import of latest vehicles,
Current and anticipated issues in the transport for example 4WD Hi Lux or Scorpio, which
sector of Bhutan need special high-octane petrol has also been
The options to improve energy efficiency and accompanied by import of this fuel in the past
reduce consumption of petroleum fuels in the few years. This is evident from the import figures
transport sector can be classified into following of the past few years.
major categories. A separate Transport Sector Master Plan is
# Introducing efficient mass transport and/or being developed, which is essentially looking into
improving mass transport efficiencies. the aspects of (1) emission reduction strategies,
# Improving energy efficiency of petrol and diesel (2) traffic density and traffic flow analysis, and
vehicles by making the latest European vehicle (3) suggestions on mass transport and alternative
efficiency norm compliance mandatory for the transport means like rope ways and river navigation
imported vehicles. for mountainous areas. The Transport Sector
# Introducing alternative fuel vehicles. Master Plan study team has already identified
# Designing transport system, including traffic some strategies for the above aspects. However, it
flow analysis, for reducing traffic congestion. is advisable to study them from energy efficiency
# Introducing alternative transport methods such point of view so that energy-efficient technologies
as river navigation and rope ways. are selected.
For a place like Bhutan, which has very few
Improving energy efficiency of petrol and industries and no thermal power plants, the
diesel vehicles transport sector contributes substantially to air
Situational analysis pollution. As all major settlements are situated
Bhutan imports vehicles from nearby countries. in valleys, local air pollution levels are bound to
Majority of vehicles come from India, followed by increase due to the extensive use of fossil fuels
Korea and Japan. Due to regulations in customs in the transport sector. The Transport Sector
and major imports being through the state-owned Master Plan is looking into the pollution levels
State Trading Corporation of Bhutan and balance and emission standards issues; hence, these are not
through the agents of major vehicle manufacturers considered exclusively in this study.
like Maruti Motors in India and Hundai from
Korea, Bhutan has so far not experienced dumping Introduction of vehicles running on
of old vehicles from nearby countries due to the alternative fuel
prohibition imposed by the Royal Government of Vehicles running on alternative fuels are becoming
Bhutan (RGoB). This has prevented the use of old reality in many countries. Alternative fuels offer
and inefficient vehicles in the country. However, choice of fuels that contain less or practically
in the future, import of even more efficient motor zero pollutant. Examples of such fuels are CNG
vehicles should be encouraged. (compressed natural gas) and biofuels, which
Engine exhaust emissions are also closely linked can be produced in an environment-friendly
to the fuel efficiency of the vehicles. Thus, use of way by using carbon-neutral bioenergy. Vehicles
efficient vehicles is of paramount importance to running on electricity are also becoming popular.
keep the local air pollution levels low. Various fuel Futuristic options include hybrid vehicles that
efficiency norms are developed and adopted in India run on hydrogen and electricity. A range of fuel
and other European countries. As a policy measure options are being evaluated for the transport sector
to promote the use of fuel-efficient vehicles, the worldwide (TERI 2005) and are discussed in the
government could put in place mandatory strict subsequent sections.
vehicle emission control norms. These norms also

CHAPTER
Compressed natural gas provided at subsidized rate. Thus, because the use
Use of CNG as a clean and cheaper fuel for of LPG as a cleaner fuel to reduce air pollution
transport has proved to be successful in many is an option, its import under subsidy quota
cases, including public transport system of the for transport applications could be discussed
Indian capital city of New Delhi. It is a safe, in bilateral meetings with India. This may have
clean burning, and environment-friendly fuel. It impact on trade balance. A study to compare the
has been established that exhaust emissions like pros and cons of using LPG for other applications
hydrocarbons and carbon monoxide are significantly in general and for the transport sector in particular
reduced when CNG is used as compared to other is required, as other issues like infrastructure for
fuels. Toxic emissions of lead and sulphur are distribution, and market segments and their share
completely eliminated. Existing petrol vehicles can in LPG demand are also important and need to
use CNG by fitting a conversion kit. The CNG- be studied in detail. A joint study between Bhutan
converted vehicles have the flexibility of operating and India can be taken up in the Tenth Plan.
either on petrol or on CNG. Recently, major
vehicle manufacturers in India have introduced Biofuels
CNG vehicles in the Indian market. However, Biofuels are the fuels derived from biomass, that
in Bhutan, lack of infrastructure and limited is, recently living organisms or their metabolic by-
availability of CNG are major barriers in the use products. Ethanol, methanol, and bio-diesel are
of CNG in the transport sector. However, under important biofuels that can be used for vehicular
South Asian Association for Regional Cooperation applications.
(SAARC) initiative, Bhutan can look into the
Ethanol and methanol
possibility of getting CNG for the transport
Mixing of ethanol and methanol in petrol and
sector and industries, at least in the border areas
diesel, up to 10%, is possible for use in conventional
of Bhutan. Techno-financial feasibility studies are
petrol and diesel engines without any modification.
required for this purpose, which can be taken
Ethanol and methanol are generally produced as
up in the Tenth Plan period. Investments in the
by-products in sugar and other industries. Bhutan
development of infrastructure for CNG transport
currently has no industries producing ethanol or
and handling would be a critical issue, considering
methanol.
the number of vehicles in the countries and their
distribution. Bio-diesel
Bio-diesel is produced by processing vegetable
Liquefied petroleum gas
oil. This process, called as esterification, converts
LPG is deemed to be superior to petrol and diesel
vegetable oil to a diesel-like fuel having properties
in terms of vehicular emissions. To abate pollution
similar to diesel. The interest in bio-diesel is
caused by vehicles, a number of countries have
increasing worldwide since 2000. The US and the
been using LPG as auto fuel.
European countries are using soybean, rapeseed,
Typically, the exhaust emissions of vehicles
and other edible oils for producing bio-diesel. In
running on LPG comprise
India, bio-diesel production using locally available
# 75% less carbon monoxide,
species of non-edible oil-bearing plant seeds such
# 85% less hydrocarbons,
as jatropha and pongamia is preferred. In Bhutan,
# 40% less nitrous oxide, and
locally available oil-bearing plants can be studied,
# result in 87% less ozone depletion.
and indigenous development of bio-diesel can be
as compared to vehicles running on petrol.
taken up as a joint research project with the Indian
institutes under the aegis of the Department of
Recommendations
Science and Technology (DST). This would be a
Currently, Bhutan imports LPG from India,
medium-term (five to seven years) strategy, which
and under the bilateral arrangement, the LPG is
can be initiated in the Tenth Plan.

CHAPTER
Electric vehicles fuel economy of new small cars sold in India is

With vast potential available for hydropower about 13.6 km per litre, while that of a small four-
generation, use of electricity for mass transport and stroke motorcycle is 54 km per litre, and that of
use of electric/hybrid vehicles for personal transport buses is around 3 km per litre. These figures do
are viable options for Bhutan in medium term. not reflect the state-of-the-art technology but point
Hybrid (petrol–electric) and electric vehicles are to the fact that due to lower power requirement
now being developed by many major automobile and small size, coupled with advanced technology,
manufacturers worldwide. Currently, vehicles considerable improvements are possible in vehicles.
are imported from India, Japan, Korea, and The fuel economy based on typical vehicles likely
China. Automobile companies in these countries, to be operated in India through 2020 is given in
especially in India and Japan, have already Table 2. These could be considered for Bhutan as
flooded the market with electric vehicles. Major well, as most of the vehicles are imported from
automobile manufacturers like M/s Mahindra and India.
Mahindra and M/s Bajaj Auto Ltd from India
are already testing electric three-wheelers (six- Table 2
seater vehicles) in Indian markets. These vehicles
FUEL ECONOMY BASED ON TYPICAL VEHICLES LIKELY TO
can be introduced in Bhutan on demonstration
BE OPERATED IN INDIA
basis for public transport in cities like Thimphu
Vehicle type Fuel economy in Fuel economy in
and Phuentsholing. A note on the experience of
2000 (km/litre) 2020 (km/litre)
implementing electric vehicles as public transport
Gasoline motor scooter 38.4 42.4
is given in Box 2. Market for electric cars like REVA
(two-stroke)
can also be explored, especially in flat terrain areas
Gasoline motor scooter 53.8 39.9
in southern Bhutan.
(four-stroke)
Electric minibuses are being introduced by many
Gasoline car 13.6 14.5
Indian automobile manufacturers like Mahindra
and Mahindra and others. Diesel car 20.0 21.3
Minibuses and three-wheelers running on Diesel bus 3.27 3.36

electricity can be promoted in small urban Note Fuel consumption estimates are based on the study by Bose
areas and in major town areas like Thimphu. and Nesamani (2000)
The DoE and the Ministry of Information and
Communications (MoIC) can undertake a joint Diesel vehicles have better fuel economy than the
project, which can also be submitted as a Clean gasoline ones, as diesel engines are more efficient
Development Mechanism (CDM) project. and diesel fuel contains more energy per litre.
However, emissions from diesel vehicles are a
Recommendations on improving energy serious problem.
efficiency of petrol and diesel vehicles The sulphur in diesel has considerable potential
Technological innovations are increasingly gaining to pollute the air and adversely affect human
importance in the transport sector. The average health, causing respiratory disorders due to the
BOX 2
NEPAL’S EXPERIENCE WITH ELECTRIC VEHICLE

To tackle the problem of air pollution in Kathmandu valley, Nepal started using electric vehicles in 1997. These
were known as Safa tempos. About 600 of these tempos were introduced. Subsequently, a major project was
initiated by ‘Kathmandu Electric Vehicle Alliance (KEVA)’ to improve the operational efficiency of these tempos.
KEVA is a joint programme undertaken by an NGO (non-governmental organization), government, and private
sector to improve the air quality of the Kathmandu valley. Details of the project are available at <http://www.
cleanairnet.org/caiasia/1412/articles-60355_project.pdf>.

CHAPTER
emission of high level of respirable particulate and, most importantly, proper storage, handling,
matter. Hence, low sulphur diesel, that is, diesel and processing of harvested produce to reduce
containing 0.5% sulphur by weight as against the wastage are few things that can be considered
normal proportion of 1% by weight, or ultra low jointly by the DoE and Ministry of Agriculture
sulphur diesel, that is, diesel containing 0.25% (MoA).
sulphur, is used in many countries. The Ministry Various studies conducted and data generated
of Economic Affairs can consider making ultra show that the diesel-powered multi-utility power
low sulphur diesel mandatory in phased manner tillers are the most useful and, hence, sought-after
in Bhutan. farm equipment in Bhutan. These are currently
subsidized under Japanese funds. The RGoB
AGRICULTURE SECTOR can consider providing further support for this
Energy needs of the agriculture sector vary at programme to improve the availability of such
different stages, as shown in Figure 4. power tillers. Some applications for the agriculture
Currently, energy consumption in farming is sector, which can help reduce the overall energy
very low, mainly due to the mountainous nature demand or import of energy, are discussed
of the terrain, small farm size, and low investment subsequently.
in farming.
However, modern energy based interventions to
improve farm productivity and labour efficiency,
thereby reducing the requirement of human labour
FIGURE 4 ENERGY INPUTS IN THE AGRICULTURE SECTOR IN BHUTAN

CHAPTER
Biogas-based water pumping, space heating, demonstration programme. Also, solar-powered

and food processing fencing may be implemented in the farms.
The agriculture sector generates biomass residue
as a farm product waste, along with other wastes
Mechanization/cold storage facilities/ice
like animal dung. Biogas plants may be developed
production facilities
at these farm sites, and the gas produced can Refrigerated/ice cooled trailers for power
be used for pumping water, space heating, and tiller/ refrigerated vehicles
food processing applications. The DoE can take Loss of agriculture produce in transit between
initiatives in the implementation of these plants farms and marketplace is common in Bhutan due
by creating awareness and providing subsidy to difficult terrain and lack of farm roads in most
schemes. parts of the country. This loss can be reduced by
developing small movable refrigeration/ice storage
Diesel-powered power tillers systems, which can store farm produce in cold
Diesel-powered power tillers are currently provided storage till they are delivered. Special research and
by the MoA through Japanese government’s aided development project can be taken up jointly by
scheme on subsidy. These power tillers are multi- research organizations in India, such as TERI, in
purpose and are quite popular among farmers as collaboration with the DoE and MoA. This would
is evident from the fact that there is a waiting list prove to be a very useful strategy in long term.
for procuring these tillers. These tillers are driven
by diesel and their faster penetration would lead Promotion of gasifier for cardamom drying
to improved farm productivity. Cardamom is one of the most important agriculture
products in Bhutan, which requires drying. To
Small wind-operated pump sets use the locally available biomass resources for the
Bhutan’s agriculture sector represented by dry land drying purpose, biomass gasifiers can be used for
farming, which depends on rainwater. Because the drying. Initially, the DoE may install a gasifier
terrain is mountainous, It is difficult to dig canals under a demonstration project and then promote
and pump water. In windy areas, small mechanical the installation of these gasifiers by undertaking
wind pumps or small wind electric generator awareness campaign and providing subsidy to
powered pump sets can be installed. These would farmers.
be site-specific applications. The DoE can initiate
Overall implementation strategy for the
a demonstration programme on these lines.
demand side management
Energy-efficient pump sets The precise time schedule for the implementation
Although water pump sets are not used extensively of the strategies suggested above are given in Table
in the agriculture sector in Bhutan when compared 3, and the results of the impact assessment of the
with other countries, energy-efficient pump sets proposed strategies are given in Table 4.
can be promoted through labelling scheme, which
ESTIMATED BUDGET FOR THE IMPLEMENTATION
is proposed for all electrical appliances.
OF DIFFERENT STRATEGIES RECOMMENDED FOR
Solar-powered pesticide sprayers and solar DEMAND SIDE MANAGEMENT OF ENERGY
fencing A budget has been estimated for different strategies,
Solar-powered pesticide sprayers are handy by sector, as suggested for the implementation of
equipment, which run on solar-powered packs. the plan related to the demand side management
These would be useful for farmers as they are light of energy and is given in Table 5. This budget head
weight and easy to operate. does not include the capital cost and manpower
It is recommended that the MoA and DoE cost involved from the implementing agencies.
introduce them under jointly funded subsidy/

CHAPTER
Table 3
PROPOSED IMPLEMENTATION SCHEDULE FOR DEMAND SIDE MANAGEMENT (DSM) MEASURES
2008
2020
2015
2010
Promotion of improved cook stoves
Promotion of efficient fodder cooking devices
Use of energy-efficient liquefied petroleum gas (LPG)

stove
Promotion of energy-efficient appliances and compact
Residential
fluorescent lamp (CFL)
Promotion of briquettes and pellets
Promotion of solar lanterns or home lighting systems
Promotion of solar water heating systems
Use of hydrogen cook stoves
Promotion of energy-efficient building technologies/

materials
Promotion of small wind systems for farm houses
Use of energy-efficient cook stoves and other devices

institutional sector
for cooking
Commercial and
Promotion of CFL and other energy-efficient lighting

fixtures in commercial buildings
Promotion of use of dish-type solar cookers
Promotion of solar water heaters

Promotion of solar photovoltaic systems for schools/
monasteries
Promotion of energy-efficient buildings/codes
Industrial
Energy efficient systems and mandatory measures for

Sector
energy efficiency in industries
Introduction of norms for energy consumption in

industries
Deployment of electric vehicles

Transpor t
sector
Alternate (LPG/liquefied natural gas) fuel vehicles

Efficient public transport system for cities and inter-
cities
City traffic planning
Biogas based water pumping , space heating, food
Agriculture
processing
sector
Solar fencing for agriculture farms

Promotion of solar and wind pumping systems
Development and deployment of hybrid dryers
Promotion of gasifiers for cardamom drying

CHAPTER
Table 4
IMPACT ASSESSMENT OF PROPOSED STRATEGIES
Main categories Social Energy Reduction in Forest Trade Energy Millennium
equity security local pollution conservation balance conservation Development
Goals served
Promotion of compact fluorescent lamp Yes
Promotion of improved cook stoves Yes Yes
Promotion of briquettes and pellets Yes Yes Yes Yes
Promotion of energy-efficient appliances Yes Yes Yes
Promotion of energy-efficient building Yes Yes Yes Yes
technologies/materials
Promotion of efficient fodder cooking devices Yes Yes Yes Yes
Promotion of solar water heating systems Yes Yes Yes
Promotion of solar lanterns and home lighting Yes Yes Yes Yes
systems
Hydrogen cook stoves Yes Yes

CHAPTER
Table 5
BUDGET ESTIMATES FOR IMPLEMENTATION OF DIFFERENT STRATEGIES FOR DEMAND SIDE MANAGEMENT (IN MILLION NU)
Sector Proposed strategy/measure Targets Role of the Department of 2012 2015 2020 Total
Energy
Promotion of improved cook stoves 50% (40 000) of the total Providing subsidy and then 120 120 50 290
households that are using distribution of improved cook
wood/kerosene for cooking stove, especially in rural areas
will be provided with improved
cook stove by 2012, 75% will
be provided by 2015, and
100% by 2020
Promotion of efficient fodder cooking About 500–1000 cook stoves Providing subsidy and then 50 50 50 150
devices on demonstration basis in the distribution of improved cook
Tenth Plan stove for fodder cooking
Use of energy-efficient liquefied 50% replacement of old LPG Organize awareness campaign 10 10 10 30
petroleum gas (LPG) stove cook stoves with efficient and providing subsidy for
cook stoves by 2015, and efficient LPG stove and make
100% by 2020 available these stoves to people
Promotion of energy efficient 50% of the households start Implement the scheme of 5 5 5 15
appliances and compact fluorescent using CFLs by 2015 and distribution of the CFLs to the all
lamp (CFL) 100% by 2020 households
Promotion of briquettes and pellets One or two briquette making Develop a plan for the 5 5 5 15
industry may be developed implementation of the
by 2015 briquetting/pelleting industry
Promotion of solar lanterns or home Providing solar lanterns/solar Develop strategy for distribution 250 100 50 400
Residential
lighting systems PV systems to the households of the solar lanterns/small solar

that use fuelwood or kerosene PV systems to rural households
as a source for lighting; 50%
to be provided by 2012 and
100% by 2015
Promotion of solar water heating 25% of the total households Make plan for implementation of 162 150 150 461.9352
(SWH) systems would start using SWH system the solar water heating systems
by 2015 (that is, 1.8 million by the households in Bhutan
litres per day capacity water
heating system ) and 50%
by 2020 (3 850 000 litres
per day)
Use of hydrogen cook stoves 5%–10% of the households Organize awareness campaign 10 10
start using Hydrogen cook
stoves by 2020
Promotion of energy-efficient building 2500 new households Organize awareness campaign 317.5 350 350 1017.5
technologies/ materials constructed by 2015 will be for the public as well as the
energy–efficient; and this architects and developers,
figure will be about 5000 by Financial support for
2020 incorporation of measures
Promotion of small wind systems for 5%–10% households will Implement few small windmills 200 300 100 600
farm houses start using small wind-solar on demonstration basis and
hybrid systems for the lighting provide subsidy to the people for
in their houses by 2015 using these windmills
Table 5 contd...

CHAPTER
Table 5
CONTD...
Sector Proposed strategy/measure Targets Role of the Department of 2012 2015 2020 Total
Energy
Use of energy-efficient cook stoves and 50% of the commercial users Subsidy schemes, awareness 200 200 200 600
other devices for cooking will start using improved cook creation, promotional campaign
stoves by 2015
Commercial and institutional sector
Promotion of CFL and other energy- Replacement of normal bulbs Subsidy schemes, awareness 200 200 200 600
efficient lighting fixtures in commercial by CFL in all commercial creation, promotional campaign
buildings buildings
Promotion of the use of dish-type solar 50 installations by 2012 Subsidy schemes, awareness 2.5 5 5 12.5
cookers creation, promotional campaign
Promotion of SWH Subsidy scheme, Promotional 15 20 25 60
activities
Promotion of solar PV/ wind hybrid 1000 installations by 2012 Feasibility study, subsidy 50 50 50 150
systems for schools/monasteries scheme, Implementation
Promotion of energy-efficient 10–15 buildings by 2012 Awareness campaign and 200 500 1000 1700
buildings/ codes development of codes for energy
efficiency in buildings
Energy-efficient systems and Five major industries by 2012 Support to carry out audits, 10 20 30 60
Industrial Sector
mandatory measures for energy Funding for implementation,

efficiency in industries Awareness campaign and
development of the measures
for energy efficiency
Introduction of norms for energy Norms to be developed by Development of norms and 10 10 10 30
consumption in industries 2012 formation of policies/ regulation
Deployment of electric vehicles 100 vehicles by 2012 Development of scheme for 50 50 100 200
promotion, subsidy support
Alternative (LPG/liquefied natural gas) Feasibility study by 2010, Funding for feasibility study 10 500 510
Transport sector
fuel vehicles Infrastructure development

by 2015
Efficient/electric public transport Feasibility study by 2010, Study for implementation 100 - - 100
system for cities and inter-cities Infrastructure development model, project development,
by 2015 implementation for Thimphu-
Paro road
City traffic planning Transport plan to be Awareness campaign and 50 50
developed through RSTA development of plan
Biogas based water pumping , space 100 plants by 2012 Feasibility study and technology 10 10 10 30
heating, food processing assessment
Solar fencing for agriculture farms 100 farms by 2012 Subsidy support, supply of solar 2 10 10 22
fencing
Agriculture sector
Promotion of solar and wind pumping 100 numbers by 2012 Feasibility study, technology 20 20 20 60
systems assessment, subsidy
programme
Development and deployment of 500 numbers by 2012 Feasibility study, technology 50 50 50 150
hybrid dryers assessment, subsidy
programme
Promotion of gasifiers for cardamom 100 numbers by 2012 Feasibility study, technology 1.5 2 3 6.5
drying assessment, subsidy
programme
TOTAL 2060 2717 2493 7330.44

CHAPTER 6
Overarching issues: energy,

development, and environment
T
here are many issues that are closely to meet the needs of a growing industry. Bhutan’s
related with the way the development energy system is also particularly vulnerable to the
of the energy sector is taking place impacts of climate change, given that water flows
in Bhutan. While some of these cross are likely to be affected due to global warming
linkages are quite obvious, a few are not that in future (ICIMOD 2005). Apart from this, other
apparent. The following sections attempt to put climate change adaptation issues may emerge over
these critical issues in the right perspective. the period. The issue of adaptation to climate
change is discussed later in this chapter.
ENERGY SECURITY For a developing country like Bhutan that has
The concept of energy security has witnessed a a mountainous terrain, energy security also needs
paradigm change. Historically, energy security to be looked at from a micro perspective—are
focused primarily on concerns on oil disruption the remotest regions and the poorest assured of
in the oil-producing world. This concern has not secure and affordable energy? The basic nature of
been addressed till now. In fact, many other related energy would imply that the energy for essential
concerns have emerged now. Concerns over energy household needs should be given preference when
security are not limited to oil alone; reliability energy is available in limited quantity. Although
of electricity supply systems has become an policy directives are clear on this front, this also
important issue, given the chronic power shortages necessitates that decentralized or non-conventional
in developing countries and incidents of blackouts source of energy be tapped not just to minimize
in the developed world. Sophisticated integration import dependence but also to provide energy
of energy systems also means that a break at any where conventional supply networks cannot
point in the supply chain can reverberate through reach.
the entire system. Moreover, it must be recognized Following points reflect some of the country-
that energy security is not a stand-alone entity. specific energy security concerns in Bhutan.
It assumes a larger dimension among countries. # Plugging electricity demand–supply gap during
At the same time, a new range of vulnerabilities lean period.
has become more evident—energy systems are # High dependence on hydropower, with
at unprecedented risk from political turmoil, hydropower accounting for more than 99% of
terrorism, and the impacts of climate change. the electricity generated. Furthermore, country’s
Bhutan is already confronting some of these two major power plants, namely, Chukha and
issues. The country has no known reserves of fossil Tala hydropower plants, are responsible for the
fuels and has no option but to import oil to satisfy majority of electricity generation.
its growing needs. # Vulnerability of power generation to water
While hydropower is available in plenty to meet supply due to the impact of climate change.
the country’s needs, there are concerns about the # Dependence of the country on oil import from
shortage of electricity in the lean season, especially India.

CHAPTER
6 OVERARCHING ISSUES: ENERGY, DEVELOPMENT, AND ENVIRONMENT
# Little choice of other energy resources, as regional disparities – in terms of per capita income
the electricity sector is highly subsidized and and availability of basic services – both across the
hydropower is cheap. different geographical regions of the country as
well as between rural and urban areas. Almost
While maintaining the security of supply at 70% of the Bhutan’s population, comprising
the macro and micro levels by investing in 634 982 people (Census of Bhutan 2005), resides
infrastructure and diversification of the energy in rural areas. Not surprisingly, poverty in Bhutan
portfolio, another important aspect of energy is largely a rural phenomenon as the data of the
security is reducing energy consumption by Bhutan Living Standards Survey 2003 noted that
improving energy efficiency. This has increasingly about 40% of the rural population was poor, while
become a feasible alternative today due to the less than 5% of the urban population was poor.1
advancement of technology and the possibility of Likewise, the poverty gap and poverty severity
international technology transfers. In most cases, indices showed that poverty was deeply entrenched
the best near-term option for increasing energy and more severe in rural areas as compared to
security is through energy efficiency. These options urban areas.2
are covered extensively in the earlier chapters. The regional disparity is also evident in the
spread of the electricity network in the country,
ENERGY FOR POVERTY REDUCTION AND as discussed in Chapter 4. These disparities are
BALANCED REGIONAL GROWTH reflected in the tendency of most immigrants to
It is now well established that income (or the lack move towards the western part of the country.
of it) is only one aspect of poverty. In a wider sense, Migration to towns in the western region is almost
poverty is deprivation, which may be traced to five double of that in the eastern region.
inter-related clusters of disadvantages: physical This divide would need to be tackled using a
weakness (lack of strength, under-nutrition, ill two-pronged approach—on the one hand, there
health, disability, high ratio of dependents to is a need to plan more townships, particularly in
active adults); isolation (physical remoteness, the eastern part of the country, on the other, the
ignorance, and lack of access to information or ‘push factor’ from rural areas needs to be arrested
knowledge); income poverty (lack of income through concerted efforts at rural development.
and wealth); vulnerability (increased exposure The importance of rural development in poverty
to contingencies, and danger of becoming more reduction is evident from the fact that it has been
deprived); and powerlessness (inability to cope, identified, together with the promotion of balanced
adapt, and choose) (Chambers 1989). regional development, private sector development,
Energy can play a fundamental role in minimizing and infrastructure development as the main
each of these disadvantages, as shown in Figure 1. objectives in the Tenth Five-year Plan guidelines.
While issues related to electricity export and The next section describes the challenges facing
optimizing the use of electricity for the promotion rural economic development in Bhutan and
of domestic industry have been dealt with before, expounds how energy services can address them.
this section discusses the importance of energy
systems and options to be planned so as to promote Challenges in rural development
regionally balanced development. About 66% of the Bhutanese workforce is engaged
A quick look at the economic and social in agriculture and forestry (Statistical Yearbook of
indicators for Bhutan shows the presence of Bhutan 2005).3 Farming in Bhutan is a challenge
1
The poor include households with real consumption less than the poverty line.
2
The Poverty Gap Index measures the intensity of poverty for the population—it reflects the difference between the poverty line and
actual expenditure. The Poverty Severity Index is calculated as the weighted sum of poverty gaps (as a proportion of the poverty line),
with weight proportionate to poverty gaps.
3
The main cereals growing in Bhutan are rice, maize, wheat, barley, buckwheat, and millet. Cash crops include oranges, potatoes, apples,
plums, walnuts, and vegetables. Cereal cultivation is, however, dominated by maize and rice.

CHAPTER
OVERARCHING ISSUES: ENERGY, DEVELOPMENT, AND ENVIRONMENT 6
FIGURE 1 ENERGY SERVICES CONTRIBUTE TO BREAKING THE DEPRIVATION TRAP
because of low soil fertility, poor infrastructure, Livestock rearing is an integral part of the
small landholding size, occurrence of natural farming system in the country. Close to 95% of
disasters like floods, and the mountainous terrain, the rural households own an average of five to
all of which make the activity labour-intensive. nine cattle, which primarily serve as a source of
The majority of the farming households own less draught power and manure for their fields and
than 3 acres of land (RNR Statistics 2000), which dairy products for household uses. However,
can only provide subsistence living, as is evident the potential of livestock in contributing to farm
from the fact that less than 5% of the domestic income is constrained by the lack of adequate feed
rice production in the country in 2002 (38 000 and fodder and poor health services.
tonnes) was marketed. Some 54 000 tonnes of Inadequate return from agriculture is fuelling
rice was imported to meet domestic demand. migration from rural to urban areas. The resulting
Studies suggest that in many villages, up to 50% decline in the availability of labour further affects
of the households are often food insecure, while the productivity of the sector, which has historically
seasonally, this figure may go up to 75%. Box 1 been labour-intensive. The influx of migrants is
presents constraints encountered in food grain restricted to a few urban centres. Some estimates
production. suggest that at 10% rate of growth of population,

CHAPTER
BOX 1
CONSTRAINTS IN FOOD GRAIN PRODUCTION

According to a survey carried out by the Ministry of Agriculture, Royal Government of Bhutan, the main
constraints faced by the farming households in food grain production include destruction by wild animals (54%
of the respondents saw this as a major concern), lack of irrigation (28%), labour shortage (20%), and small size
of landholding (13%). Destruction by pests and diseases (13%) and limited access to markets (10%) also affect
food grain production
Source RNR Statistics (2000)
Thimphu is growing at a rate, which is more than services, including land legislation and land
three times the national rate, with Phuentsholing markets, are not well developed.
only slightly behind. At this rate, close to half of # Employment opportunities in urban areas will
Bhutan’s population will be living in urban areas not be enough for a growing urban population,
within the next 20–25 years (Vision 2020). The rate which could result in social and political
of urbanization is a concern for several reasons. instability in the country (see Box 2).
# Given the topography of the country, the land
required to accommodate the growing urban There is a need to restrict migration by creating
population is limited. The general absence of viable opportunities in rural areas, which would
flat land for population could result in the allow the poor to participate in the market
settlement at steeper valley slopes, which should economy and improve their livelihoods. Given
be best left for vegetation cover. Apart from the intrinsic constraints faced by the agriculture
enhancing deforestation, this could also add to sector in Bhutan, the key to rural development
the risks of erosion, disruption of watercourses, will be agricultural diversification and promotion
and the possibility of flooding and landslides of small-scale and cottage industries in rural areas,
during monsoons. with an emphasis on high-value niche markets.This
# Towns are poorly equipped to deal with a rapid will also catalyse more dispersed and regionally
influx of migrants, as urban infrastructure and balanced growth and employment compared to
BOX 2
RURAL–URBAN MIGRATION: DRIVERS AND FALLOUT

The first labour force survey held in 1998 found that 76% of the labour force was employed in the agriculture
sector.After that, employment in the Renewable and Natural Resources (RNR) sector decreased to about 66% in
2004. Over 81% of the unemployed in Bhutan live in rural areas. A study on rural–urban migration, carried out
by the Ministry of Agriculture, found that 47% of all households comprised migrants. While lack of educational
facilities was the reason behind migration of 46% of the people, 19% left their villages due to small landholdings,
drudgery of farm work, unproductive agriculture, crop damages by wild animals, and natural calamities.
The demographic transition in the country will mean that the growth in the demand for jobs will far exceed
the rate of population growth. Vision 2020 for Bhutan notes that by 2020, a total of 267 000 jobs will need to be
created even under the most favourable demographic scenario. The number of job seekers will be considerably
higher if one factors in those who chose to leave the RNR sector and migrate to urban areas and those who
are displaced as a result of mechanization or improvements in labour productivity in the agriculture and other
sectors.
On the other hand, the gross domestic product (GDP) growth in Bhutan in the last decade or so has been
driven by hydropower, construction, service, and power-intensive manufacturing sectors, which have relatively
low employment elasticity. The Bhutanese have a preference for public sector jobs; however, given the emphasis
on the formation of a compact, professional, and efficient organization, future opportunities in the government
will also be limited.

CHAPTER
large industry. Currently, over 55% of industries resources. Several initiatives are being undertaken
in Bhutan are located in Thimphu, Chukha, and in rural areas, as listed below.
Paro Dzongkhags (Statistical Yearbook 2005). The # Enhancing food grain production through
importance of industry and services in rural areas improved crop varieties and complementary
is evident from the fact that in rural areas, a greater inputs.
proportion of the non-poor work in these sectors # Exploiting the regional and seasonal comparative
compared to the poor (Table 1). advantages that Bhutan has in the cultivation
of both temperate and sub-temperate fruits
Table 1 and vegetables. In 2004, exports of oranges
constituted about 3.4% of the total value of top
SECTOR OF EMPLOYMENT, BY POVERTY STATUS
10 exports from Bhutan (Statistical Yearbook
Sector of Urban (%) Rural (%)
of Bhutan 2005). The government aims at
employment Poor Non-poor Poor Non-poor increasing the value of horticultural exports by
Agriculture 7.49 5.76 95.52 88.89 200% by 2007 and by 300% by 2012 (Vision
Industry 15.96 10.47 0.54 1.81 2020).
Services 76.55 83.77 3.94 9.30 # Diversifying the rural economic base by
encouraging other high-value, low-value, and
Source National Statistical Bureau (2004)
off-season produce, such as medicinal and
aromatic plants, and floriculture.
Though small- and cottage-scale firms comprise
# Developing small and cottage industries in rural
about 40% of the industrial units in Bhutan (Figure
areas with an emphasis on creating productive
2), the sector is dominated by micro-enterprises
employment rather than capturing export
(largely comprising small family-run business such
markets.
as restaurants, tea stalls, and rice mills) that have
# Promoting animal health services, feed and
limited scope for expansion.
fodder production, and animal breeding services,
The Royal Government of Bhutan (RGoB) is
given that livestock represent an important asset,
following a ‘triple gem approach’ for agricultural
especially for the marginal farmers. Further,
development and diversification by increasing
development of backyard livestock farms can
productivity, accessibility, and marketing in
also bring down imports of animal products
order to achieve national food security, raise cash
like cheese and meat.
incomes and employment opportunities in rural
areas, generate export revenue, and achieve an
The realization of these objectives calls for urgent
improvement in the nutritional status of the rural
and significant expansion of rural infrastructure,
population while conserving and managing natural
including farm mechanization, irrigation, roads,
cold storage facilities, and access of small-scale
producers to technology, credit, and markets. Left
to market mechanisms, the focus on the growth
of urban and large industry will continue for
reasons related to economies of scale, profitability,
and access to infrastructure, markets, credit, and
technology.
Energy will be a key input in the government’s
efforts towards rural development and reducing
the rates of rural–urban migration. The Vision
Statement clearly brings out the importance of
roads and electricity in bringing the communities
FIGURE 2 DISTRIBUTION OF INDUSTRY, BY SIZE (%) out of their isolation, increasing access to markets

CHAPTER
and services, and facilitating rural industrialization ENVIRONMENTAL SUSTAINABILITY

and, hence, creating productive employment in Preservation and sustainable use of the
rural areas. environment are the main principles of the
development philosophy in Bhutan. This is not
Energy for rural development only important in itself but also closely linked to
Energy is a key ingredient for rural development, both economic growth of the country (given the
whether it is for agricultural growth and economic importance of hydropower and tourism)
diversification, for the promotion of rural industry and poverty reduction (given the dependence
or for augmenting the provision of basic education of communities on forests for food, medicines,
and health care services. energy, fodder, organic fertilizers, and so on).
Energy constitutes a key direct and indirect Environmental sustainability would, therefore, be
input into agriculture. Direct energy needs include a key criterion in the policy-making across sectors.
energy required for land preparation, cultivation, From the point of view of the energy sector,
irrigation, harvesting, post-harvest processing, important environmental issues include possible
food production, storage, and the transport of diversion of forest land towards constructing
agricultural inputs and outputs. Indirect energy energy infrastructure, ecological impacts of large
needs are in the form of sequestered energy in hydro projects, more so in the case of storage
fertilizers, herbicides, pesticides, and insecticides. projects that are likely to come up in future, and
Modern energy consumption can also be expected the potential impacts of climate change on the
to increase agricultural productivity and food energy sector of Bhutan. Subsequent sections
security.4 discuss these aspects in detail.
Agriculture in Bhutan continues to be based,
to a large extent, on animal and human energy. Impacts of energy infrastructure on forest area
Commercial energy use in agriculture is limited and ecology
(Bhutan Energy Data Directory 2005). While the Conservation of forests and biodiversity is a
input supply system in Bhutan is subsidized and central tenet in Bhutan’s development endeavour.
access is universal, its benefits are constrained The Department of Forests (now known as the
by the lack of proper storage facilities, transport, Department of Forestry Services) was, interestingly,
and access roads, the development of all of the first government department to be instituted in
which is dependent on energy infrastructure in 1952, with the objective to harvest timber, the most
rural areas. For example, horticulture products visible natural resource at the time. The principle of
require a temperature-controlled atmosphere for conservation against exploitation began as early as
transportation between the farm and the end 1969 when the Bhutan Forest Act was enacted.The
market, and storage. Again, irrigation systems in the Act brought all forest resources under state control
country, largely dependent on the monsoons, are with the intent to curb exploitation and rationalize
usually small, being typically less than 100 hectares usage. Subsequently, a number of legislations have
in extent, and are gravity-fed from streams. The been enacted to protect the forests of the country.
development of engineered irrigation, especially Box 3 gives a chronology of conservation legislation
for horticulture, will also need energy inputs as is and initiatives in Bhutan.
true for livestock health services. Small-scale rural Bhutan currently has about 72% of its total area
industry can also benefit from augmented energy under forest, including about 25% area declared
infrastructure in rural areas.
4
Analysis at a broad regional level suggests a correlation between high per capita modern energy consumption and food production.
While regional data may conceal many differences between countries, crop types, and urban and rural areas, the correlation is strong
in developing countries, where high inputs of modern energy can be assumed to have a positive impact on agricultural output and
food production levels. The correlation is less strong in industrialized countries, where food production is near or above required levels,
and changes in production level may reflect changes in diet and food rather than any advantages gained from an increased supply of
modern energy.

CHAPTER
as protected area. The National Forest Policy and harvest of forest resources, resulting in localized
the Constitution of Bhutan made it mandatory to overuse of forests.
keep 60% of the land under forest cover.5 Forests Such activities are not prohibited in forest
in the country face extreme pressure in terms of areas but are restricted and subject to a clearance
meeting the needs of the population (for timber, from the government. The Environmental
fuelwood, fodder, medicinal and aromatic plants, Assessment Act, 2002, establishes procedures for
pastures, organic manure, bamboo and cane for the assessment of the potential effects of strategic
handicrafts and household implements, and pulp plans, policies, programmes, and projects on the
for traditional paper making) as well as commercial environment and for the determination of policies
BOX 3
CHRONOLOGY OF CONSERVATION LEGISLATION AND INITIATIVES

IN BHUTAN
The Department of Forests (now known as the Department of Forestry Services) was the very first government
department to be instituted in 1952. The objective was to harvest timber, the most visible natural resource at the
time. The principle of conservation against exploitation was introduced as early as 1969 when the Bhutan Forest
Act was enacted. The Act brought all forest resources under state control, with the intent to curb exploitation
and rationalize usage. As the forerunner of all modern legislation, it also reflected the importance attached by
the government to the conservation of forests. This was further consolidated in 1974 with the formulation of the
National Forest Policy, the nationalization of logging operations in 1979, and the establishment of a network of
protected areas in 1983.
A ban on the exports of wood logs was imposed in 1973, which affected the cutting of forests in Bhutan for
commercial exploitation.
The Bhutan Trust Fund (BTF) for Environmental Conservation was created in 1991 under the Royal Charter
as an independent mechanism to sustain financing for environmental conservation, primarily in protected
areas. The national protected areas system was revised again in 1993 to make it more representative of the
various major ecosystems in the country. In 1995, the Forest and Nature Conservation Act, or FNCA, was ratified,
repealing the Bhutan Forest Act, 1969. The aim of the FNCA was to address evolving conservation needs,
including community participation and protected area management. In the same year, Bhutan ratified two major
international conventions related to environmental conservation—the Convention on Biological Diversity (CBD)
and the United Nations Framework Convention on Climate Change (UNFCCC). In keeping with the requirements
of the CBD, the country produced its first Biodiversity Action Plan in 1998 and, subsequently, updated it in 2002
to reflect progress and new conservation needs. A network of biological corridors linked the national protected
areas system in 1999, enlarging the system from 26% to 35% of the country’s total geographical area. In November
1999, the biological corridors were bequeathed as a ‘Gift to the Earth’ from the people of Bhutan.
The Environmental Assessment Act was passed by the National Assembly in 2000 and the Regulation for
Environmental Clearance of Projects and the Regulation on Strategic Environmental Assessment came into
effect in 2002. The Environmental Assessment Act, 2000, entered into force on 14 July 2000. The Regulation for
Environmental Clearance of Projects and the Regulation on Strategic Environmental Assessment came into effect
on 4 April 2002. Many conservation milestones were charted as Bhutan passed the National Biodiversity Act,
2003, and acceded to the Convention on International Trade in Endangered Species (CITES) of Wild Fauna and
Flora and the UN Convention on Combating Desertification (UNCCD) in 2003.
Source Department of Forestry Services, Ministry of Agriculture. 2004; National Environment Commission website
<http://www.nec.gov.bt/>
5
At present, two definitions exist for the calculation of forest cover in Bhutan. The legal definition in the Forest and Nature Conservation
Act defines forest as ‘any land and waterbody, whether or not under vegetative cover, in which no person has acquired a permanent or
transferable right of use and occupancy, whether such land is located inside or outside the forest boundary pillars, and includes land
registered in a person’s name as grazing land or woodlot for collection of leaf litter’. While the international definition of forests includes
only forest proper and scrub forest, the legal definition includes woodlot for collection of leaf litter, pastureland, and waterbodies.
It is noted that the Ministry of Agriculture uses both these definitions in different contexts—for prevention of encroachments and
management of forest area, the legal definition is used, whereas for resource assessment, the international definition is adopted.

CHAPTER
and measures to reduce potential adverse effects maps of areas to be taken up for compensatory
and promote environmental benefits. To support afforestation, phased forestry operations, by year,
the implementation of the Act, the Regulation details of species to be planted and a suitability
for the Environmental Clearance of Projects and certificate from afforestation/management point
Regulation of Strategic Environmental Assessment of view, along with the cost structure of various
was adopted in 2002. The National Environment operations while seeking approval for proposals of
Commission (NEC) has issued guidelines for a dereservation or diversion of forest land for non-
number of sectors, including hydropower, and forest uses. There are two basic ways in which
transmission lines to assist project proponents compensatory afforestation has been envisaged in
through the process of acquiring an environmental India.
clearance for their project. 1 Afforestation to be carried out over an area
The main requirements under the equivalent to the diverted forest land. This land
Environmental Assessment Act in the context should be close to reserved forest or protected
of hydropower projects are summarized in Box forest so as to enable the forest department to
4. While these cover the major impacts that are effectively manage the newly planted area.
likely to arise, it is suggested that in view of the 2 Compensatory afforestation may be done
possible increase in the diversion of forest areas on the degraded forest land the extent of
for the creation of large generation capacity which is twice that of the forest area that
(especially if storage projects are also built in the is being diverted/dereserved. The identified
future) and transmission infrastructure, a policy non-forest land is claimed by the state forest
of compensatory afforestation be introduced once department and declared as protected forests
the project meets all the requirements of the so that the plantation raised can be maintained
Environmental Assessment Act. permanently.
In India, for instance, compensatory afforestation
is one of the most important conditions stipulated It is further suggested that forests that are managed
by the central government at the behest of the and valued primarily for their ecological values (as
Supreme Court. This financial mechanism against timber and non-timber forest products)
mandates providing a comprehensive scheme, be classified as conservation forests, with more
including the details of non-forest/degraded forest severe restriction on diversion compared to other
area identified for compensatory afforestation, forests.
BOX 4
DETAILS SOUGHT FOR ENVIRONMENTAL CLEARANCE OF

HYDROPOWER PROJECTS
• Project details (for example, type, size, location, costs, technical parameters)
• Roads and transmission lines to be constructed
• Alternatives, including energy and site alternatives
• Project physical environment details, for example, topography, hydrology, possibility of being affected by
glacier lake outburst flood (GLOF), erosion rates, and sediment yield
• Biological environment, for example, impact on land use, vegetation, protected areas, wildlife, fish species,
and wetlands
• Social environment, for example, land tenure of areas, families affected, loss of houses and infrastructure,
cultural and heritage sites, water use conflicts (presence of water users in dewatered areas), aesthetics
• Mitigation measures and costs
• Monitoring programme
Source Application for Environmental Clearance Guideline for Hydropower, National Environment Commission, RGoB, 2004

CHAPTER
Forest conservation and forest regeneration impacts. Situated in one of the most seismically
In Bhutan, forests are developed using the principle active zones of the world, Bhutan faces continual
of natural forests. The forest area that is cleared threat of earthquakes. Flash floods and landslides
is left untouched for the regeneration of forest are annual occurrences, which cause significant
naturally. This policy is followed to retain the losses to lives and damage to property.6 IPCC
composition and nature of natural forest. Plantation (2007) reiterates that settlements in mountain
of outside species is not encouraged. However, in regions are at enhanced risk to glacial lake outburst
rural areas that are close to settlements, community floods, or GLOFs, caused by melting glaciers. A
social forestry is now being encouraged. June 2 note on climate extreme events is given in Box 5.
is celebrated as ‘Social Forestry Day’ every year, The most likely climatic events in Bhutan
which encourages afforestation. are increased GLOF events and flooding. Also,
Transmission network needs large area of land increased precipitation in areas without proper
to establish the network, and efforts are needed drainage systems can cause soil instabilities and,
to keep it safe from forest fires. Mainly the land consequently, landslides and flash floods. The first
around the tower is cleared, and once electrical National Communication (NATCOM) of Bhutan
lines are installed, green cover is regenerated in identifies six key areas vulnerable to climate change.
most of the area. Pruning and cutting are done to These include forests and biodiversity, agriculture,
maintain the clarity and visibility between the trees water resources, GLOFs, health, and landslides.
and transmission lines. The agriculture and hydropower sectors are the
Forests are also important to maintain the most vulnerable owing to their innate dependency
watershed areas and reduce the erosion of land, on the monsoon and temperature patterns. As more
which ultimately affects the silting of hydropower than 70% of the Bhutanese population depends
plants and river basins. on subsistence farming, crop failure and stress on
livestock rearing will affect the most vulnerable
Potential impacts of changing climatic communities in the rural areas. Uncertainty
conditions on the energy sector associated with the timing of monsoons adds to
Despite Bhutan being a low contributor to the the vulnerability of the farming community. The
global emissions, climate change is likely to have main cash crops grown by farmers (rice, potatoes,
adverse impacts on the country, spanning all chillies, apples, and oranges) are extremely sensitive
sectors of the economy and impacting livelihoods to water and temperature variations (NEC 2006).
and well-being at large. Several studies project the The presence of mountainous topography and
impacts of climate change to be severe in fragile scattered settlements implies high costs for social
ecosystems such as mountainous regions. As a least services and development of infrastructure, which
developed country situated in a mountain ecosystem add to the climate vulnerability of the country.
and owing to its limited coping capacity, Bhutan Impacts on the hydropower industry due to
is doubly vulnerable to possible climate change changes in the water regime and increased natural
BOX 5
NOTABLE CLIMATE EXTREME EVENTS IN BHUTAN

• The October 1994 flash flood on the Pho Chhu river, following a glacial lake outburst in the Lunana area,
seriously damaged the lower valleys of Punakha.
• A rare dry spell with no snowfall occurred in the winter of 1998, and even rarer mid-summer snowfall occurred
in some places in the north in July 1999.
• Flash floods in early August 2000 caused by torrential rains had large-scale impacts on life and property.
6
<http://www.undp.org.bt/env/factsheets/Disaster%20Mar06.pdf>

CHAPTER
disasters can hamper production, leading to the Adaptation and mitigation options
reduction of exports, which will ultimately impact The National Adaptation Programme of Action
economic growth (Alam and Tshering 2004). identifies least-cost options (economic, social, and
Changes in the climate system have both direct and environmental) based on the use of local resources
indirect implications on the hydrological regime. for adaptation to climate change. There are also
An increase in rainfall intensity may increase run- several ‘no-regrets’ strategies. These are usually
off and rates of soil erosion on cleared land and targeted on the most severe effects and the greatest
may also accelerate sedimentation in the existing vulnerabilities to climate change. Investments
water supply network or reservoirs. in such options essentially present ‘win-win’
Increase in temperature will result in the solutions, since they have ancillary benefits, apart
retreat of glaciers, increasing the volume of lakes, from avoiding direct climate-related costs. Some
ultimately leading to GLOFs. Possible impacts adaptation measures suggested for the country to
of GLOFs in Bhutan include disruption of river address various hazards are listed in Table 2.
flows and changes in sediment yield, thereby These measures will require the development of
impacting hydropower generation and water information and research systems to better monitor
supply; destructing settlements, infrastructure, and understand the impacts of climate change
and agricultural land; and leading to the loss of as well as assess significant capacity building of
biodiversity, apart from other impacts on human relevant institutions in the country and climate-
lives downstream. sensitive sectors, and inform the vulnerable
population on climate change and adaptation
options. Several of these issues have been
Table 2
ADAPTATION OPTIONS ACCORDING TO HAZARD TYPE
Climate hazard Adaptation option
Glacial lake outburst flood (GLOF; due to Installation of early warning systems
temperature rise) Artificial lowering of glacier lake levels
Assessment of glacial lake outburst flooding threats to hydropower projects
Landslide (due to high-intensity rain) Soil conservation and land management
Preparation of a national database on landslide-prone areas and intensity of landslides to
assess the risk of landslides
River bank protection and small stream catchment protection
Slope stabilization of areas prone to major landslides and flash floods
Flash flood (result of GLOF or due to high-intensity Watershed catchment management integrated with land management/soil conservation
rain) Weather and climate forecasting
Promote community-based forest management and afforestation projects in ways to
conserve land, water resources, and wood production
Protect water treatment plants to ensure safe drinking water
Drought (due to temperature rise and/or longer Optimize the installed power plant capacities
intervals between rains) Low river flow/water shortage studies/impact on hydropower generation, drinking, and
irrigation water supply, and so on
Weather and climate forecasting
Research and development on water use efficiency, resistant crop varieties, water
harvesting

CHAPTER
highlighted in National Adaptation Programme (involving large sunk costs). While competition
of Action (NAPA) and NATCOM. It is proposed should be encouraged in the former segment, the
that a high-level taskforce, headed by the NEC, be latter should be regulated and perhaps even be
constituted to study the impacts of climate change operated by the public sector.
on the hydropower sector specifically and propose Further, the new model needs to be pursued
various mitigation and adaptation measures that after carefully assessing its institutional and
need to be taken in a time-bound manner. structural prerequisites in a specific country or
industry.
GOVERNANCE OF ENERGY In Bhutan, the Bhutan Power Corporation
The energy sector needs to be governed for meeting (BPC) is responsible for the construction and
social, environmental, and growth objectives linked maintenance of the transmission and distribution
to energy while providing conditions that are network in the country. Additionally, the BPC also
conducive to private investment, thus empowering owns and operates small and micro power plants.
local governments and communities to play a Major power plants like Tala, Chukha, Kurichu,
proactive role in managing energy systems. and Basochhu are operated by independent power
corporations or authorities. The Department
Structure of the energy sector of Energy (DoE) has brought these generating
One important aspect of governance is the companies under one umbrella by creating larger
ownership and structure of the energy sector and Druk Green Power Corporation Ltd (DGPC).
its regulation. For much of the 20th century and Some of the issues that would need to be
in most countries, network utilities were vertically factored in while determining structural reforms
and horizontally integrated state monopolies. in the energy sector are as follows.
The reasons for public control of infrastructure # State of network facilities Unbundling and
were many—the sector’s economic importance, introduction of competition require mature
a desire to protect public interest in industries well-developed network facilities, minimizing
supplying essential services, concerns about the need for new investments wherein the
private monopolies, and the belief that the large incentive problems are more likely as compared
investments required for infrastructure creation to potentially competitive segments like
could only be augmented from public resources. distribution. In case of Bhutan, as discussed
However, the performance of state-owned in Chapter 4, network facilities still require
monopolies was far from satisfactory, whether in considerable expansion and investment.
terms of efficient and cost-effective delivery of # Institutional capacity The transition from
services or in the attainment of universal service monopoly to competition or the co-existence
obligations. The 1990s saw a dramatic change in of the two forms in different segments of
views on how network utilities should be owned, the sector plays a critical role. Regulatory
organized, and regulated, with much emphasis requirements in the latter systems are likely to be
on the efficiency benefits of competition and far more complex, requiring strong institutional
privatization. However, over a period of time, a capacity.
strong need has emerged to qualify the benefits # Profile of consumers The general economic
of the new model and develop clear guidelines on status of consumers and their ability to pay
how it should work (World Bank 2004). are important determinants of the success of
One of the key messages that emerged from the privatization. Private investment may not be
experience of the last decade is that network utilities forthcoming in cases where the government
encompass distinct activities with entirely different wants to provide energy at lifeline tariffs to a
economic characteristics. Electricity generation large section of consumers, as is the case in
and distribution may be potentially competitive Bhutan, unless the private investors are assured
segments, but transmission is a natural monopoly of a reasonable rate of return.

CHAPTER
For all these reasons, it may be premature to before granting any further licenses, keeping in
restructure and open up the electricity sector mind their stipulated energy demand and available
in Bhutan. On the other hand, the DGPC is supply options during the lean seasons.
a holding company responsible for building The setting up of industries needs to be
additional hydropower projects as well as operating determined within an overall environmentally
and maintaining the built-in projects by 2008, in sustainable framework. Promotion of industries
a manner similar to the National Hydro Power should be such that aspects such as available power,
Corporation (NHPC) established in India.7 export of power, utilization of export proceeds,
Further, transmission and distribution are likely employment generation, value addition, trade, and
to remain in the public sector in the foreseeable alternative patterns of industrial growth are carefully
future. However, given the limited availability considered. In the existing subsidized regime for
of public financial and administrative resources, the industrial sector, provision of subsidized power
the government should tap private investment, to the energy-intensive sector may be at the cost
including foreign capital, in the electricity of revenues forgone from exports. Integrating the
generation sector and more proactively involve opportunity cost in supplying to the industrial
local communities in managing off-grid systems sector, it is recommended that niche industries
and the operation and maintenance of local be encouraged in Bhutan, which utilize natural
distribution lines. resources, along with other industries that can
function with minimal energy. A note on viability
Tariff regime of power-intensive industries is given in Box 6.
The other related issue in terms of financial and cost The existing tariff regime should also be modified
constraints is tariff setting for the sale of electricity so as to recover the complete economic cost of
domestically and for exporting to India. Over the providing electricity. The tariff rationalization
years, Bhutan has regulated the electricity prices towards gradual removal of subsidies to high
domestically, setting them below the economic voltage and medium voltage consumers remains
costs to fulfil the social obligations and promote important in this respect. It is seen that while the
industrial sector. This act is justified in providing average tariffs have been revised several times,
assistance to the underprivileged sections and in they still remain highly subsidized. In January
promoting regional balanced development, but has 2003, the flat rate system of tariff was replaced
led to increased inefficiencies in the consumption by the progressive charge with different rates for
patterns of energy. Coupled with this is the lack the domestic and industrial usage. Accordingly, in
of demand side management (DSM) measures, the low-voltage category, consumers with less than
which have further resulted in inefficient usage of 80 kWh consumption had to pay Nu 0.60 a unit,
the available resources. while the rate for those consuming 80–120 kWh
The prevalent low tariffs have also resulted in and above 200 kWh per month was fixed at Nu
subsidizing the inefficiencies in the industrial sector. 0.95 and Nu 1.20 per unit, respectively. The tariff
While the pricing policies have been designed to for the medium and high voltage was fixed at Nu
strengthen the industrial base in Bhutan, provision 0.95 and Nu 0.90 per unit, respectively, along with
of subsidized electricity in several ways can harm the capacity charge of Nu 54 000 per megawatt
the economic progress if it is unable to generate per month.
adequate forward linkages to compete with the Though the steps towards tariff revisions have
export proceeds of sale of power to India. In the reduced the level of subsidies, the burden still remains
current situation of low electricity tariffs, while high. The Bhutan Electricity Authority (BEA), an
power-intensive industries are foreseen to emerge, independent regulator, has been entrusted with the
a careful feasibility analysis needs to be performed responsibility of tariff regulation. The Authority
7
Compendium of background papers, BIMSTEC workshop on ‘Sharing of experience in developing hydro projects’, 30–31 October
2006, organized by the Ministry of Power, Government of India

CHAPTER
BOX 6
VIABILIT Y OF POWER INTENSIVE INDUSTRIES
Electricity tariffs have largely been affordable to stimulate the industrial sector in Bhutan. The industrial sector
consumes 26.4% of the total energy and is the largest consumer of electricity in the country; its consumption is
pegged at 420 MU, which is about 64.7% of total electricity consumed by the industrial sector in 2005. The main
manufacturing industries in Bhutan are Penden Cement Authority Ltd (PCAL), Bhutan Ferro Alloys Ltd (BFAL), and
Bhutan Calcium Carbide Ltd (BCCL). Besides these, Druk Cement Company Ltd (DCCL), Druk Iron and Steel Plant
(DISL), and Bhutan Steels Ltd (BSL) have also been set up, which consume almost 95% of the electricity used by
the sector.
As seen from the energy demand analysis for the BAU (business-as-usual) scenario, with the upcoming
industries that have recently received licenses, the energy demand from the sector is bound to increase in the
coming years. This increased demand level would lead to a serious conflict with the total available supply, which
has to meet the growing needs of other sectors as well, besides industrial sector. Besides the availability factor,
viability of the power industries is also dependent on the cost of available supply. With the prevalent low tariff
regime for the industrial sector, industries are viable options. However, with the phasing out of subsidies, as
proposed by the Bhutan Electricity Authority (BEA), their existence might come under threat.
would determine the tariff as per the tariff policy, TRANSMISSION AND DISTRIBUTION OF
with public announcement and dissemination. ELECTRICITY
The overriding objective of the tariff policy has The power transmission and distribution network
been gradual phasing out of the subsidies—a 10% in Bhutan is managed by the BPC and comprises
increase in power tariff is proposed annually for two main grids, the western grid and the eastern
the next five years till 2012. grid, each of them covering parts of eight
Besides tariff revision, another option that Dzongkhags.
could be explored in the context of Bhutan is
cost plus tariff. In case the industry wishes to System planning
overdraw electricity, the regulator could consider The network can be divided into a bulk power
the option of providing it at a cost above the actual transmission system for supplying power from
tariff rate, subject to the availability and fulfilment Bhutan to India and an area supply or sub-station
of legal requirements. The other alternative could system for supplying domestic loads (WRMP
be to charge the second tariff to the level of export 2004).
proceeds.

CHAPTER
CHAPTER 7 RECOMMENDATIONS 7
Recommendations
At the same time, energy development must
T
his chapter consolidates various
components of the energy management plan for environmental externalities because, first,
plan in a comprehensive manner. The augmenting energy infrastructure will have impacts
analysis carried out in the earlier on forests, biodiversity, and the environment; and
chapters has identified and quantified current and second, in designing energy systems, the potential
future needs of the energy sector, and accordingly, impacts of climate change in Bhutan need to be
certain strategies have been recommended with taken into consideration.
probable impact analysis. Governance of the energy sector will be crucial
in meeting social and environmental obligations
INTEGRATED ENERGY MANAGEMENT PLAN while tapping various sources of investments and
COMPONENTS building capacity across the tiers of the government
The previous chapters discussed specific supply to manage energy systems. This is especially
and demand side strategies for Bhutan. This relevant, since the political system in Bhutan is
chapter examines some overarching issues that in a phase of transition. But first, a critical cross-
cut across these strategies and, in a sense, link cutting issue of energy security is considered, which
them with the larger development objectives of almost all countries of the world are facing.
the country.
The national development targets, as reflected INSTITUTIONAL SET-UP
in the Ninth Plan and Bhutan 2020, closely match The analysis of the energy sector of Bhutan
the Millennium Development Goals and reflect a reveals that there is no focal ministry/department
strong national political commitment to socio- to undertake the coordination of all the activities
economic development. Energy systems need related to energy. Moreover, the relevant information
to be planned in such a way that they promote on various energy sources/fuels is scattered
these objectives, with a focus on poverty reduction along various sources because single source of
and balanced regional development, taking into information is not available. As far as renewable
account the special needs of remote and rural energy and energy conservation/efficiency are
communities. This will require an emphasis on concerned, there is very limited awareness among
small- and medium-sized units and reduced the stakeholders, particularly the users. This lack
dependence on the (hydropower) construction of awareness hampers their ability to make an
industry such that the employment generating informed and judicious choice.
capacity of industry is enhanced. Also, there is an The existing institutional infrastructure for the
urgent need to revive agriculture through a focus energy sector in Bhutan is shown in Figure 1.
on value-added products and rural development, A brief note on different institutions presented
since over 60% of the country’s labour force is still in Figure 1 is given in the subsequent section.
dependent on agriculture.

CHAPTER
7 RECOMMENDATIONS
power sector policy, plans, programmes, and

guidelines/regulations; conducting feasibility
studies related to hydropower development; and
preparing detailed project reports (DPRs) for the
sustainable development of hydropower projects.
The DoE also performs the function of Royal
Government of Bhutan (RGoB)/donor/lender
fund coordination related to energy/power sector
projects. It also has the mandate to issue techno-
economic clearances and technical sanctions for
all capital works in the energy/power sector.
Bhutan Electricity Authority

The Bhutan Electricity Authority (BEA) is a
functional autonomous agency established as per
Section 7 of the Electricity Act of Bhutan, 2001, to
regulate the electricity supply industry of Bhutan.
FIGURE 1 EXISTING INSTITUTIONAL INFRASTRUCTURE The Authority consists of four commission
IN ENERGY SECTOR members and a chairman, appointed by the
minister as per the Electricity Act, 2001, and has
a full-time secretariat in Thimphu. Functions of
Ministry of Economic Affairs the BEA are as follows.
The erstwhile Ministry of Trade and Industry, # To regulate the electricity supply industry.
which was subsequently renamed as the Ministry # To set technical, safety, and performance
of Economic Affairs, was established in 1967. standards for the electricity supply industry.
Initially, known as the Ministry of Trade, # To develop electricity tariff regulations and
Commerce and Industry, it was established as a approve domestic tariffs.
full-fledged Ministry in 1968, under the reign of # To develop subsidy regulations.
the third Druk Gyalpo His Majesty King Jigme # To issue licenses and monitor compliance to
Dorji Wangchuck, and renamed as the Ministry licenses.
of Trade, Industry and Forests. Presently, besides # To settle disputes that may arise between licensees
the inclusion of the power and mining sector, it and between licensees and customers.
has been officially designated as the Ministry of # To prescribe royalties, fines, and penalties, to be
Economic Affairs from 17 October 2007. The paid by licensees.
Ministry of Economic Affairs comprises four
technical departments, namely, the departments Druk Holding and Investment
of trade, industry, energy, and geology and mines Pursuant to the Royal Charter dated 11 November
besides the four service divisions, namely, the 2007, and the Executive Order of the prime
Policy and Planning; Administration and Finance; minister, the Druk Holding and Investments
Human Resource; and Intellectual Property. Ltd (DHI) have been formed for the following
purpose.
Department of Energy # Hold shares of government-linked companies
The Department of Energy (DoE) within the (GLCs), the primary mandate of which is
Ministry of Trade and Industry has been formed commercial.
during the restructuring process of the erstwhile # Strengthen the corporate sector.
Department of Power in July 2002. The DoE is # Make investments by optimal usage of resources
responsible for the formulation of energy and or raising funds.

CHAPTER
RECOMMENDATIONS 7
# Lead, complement, and spearhead the growth # Hydropower development and planning
of a dynamic private sector, individually or (including hydrology, meteorology, and flood
through joint ventures. warning services)
# Hydropower promotion and trade
Druk Green Power Corporation # Power systems
The Druk Green Power Corporation Ltd # Sustainable energy
(DGPC) was formed on 1 January 2008, with # Fossil fuels
the amalgamation of the erstwhile hydropower
corporations. Considering the facts that (1) any surplus
The DGPC is responsible for the optimal electricity is a potential source of revenue earner
utilization of resources in the management of existing through exports and (2) the preservation of its
power plants and building capacity to develop pristine environment is country’s topmost priority,
hydropower projects either independently, through it is evident that much more emphasis would have
joint venture or by any other arrangement. to be laid on (1) new renewable energy resources
(such as biomass and solar) and (2) energy
Bhutan Power Corporation conservation and energy efficiency. To attain these
Bhutan Power Corporation Ltd (BPC) was goals, the present Renewable Energy Department
launched as a public utility on 1 July 2002, with (RED) may be converted to Sustainable Energy
the mandate of distributing electricity throughout Department (SED).
the country and also providing transmission access The SED would, therefore, make the endeavour
for generating stations for domestic supply as well of mainstreaming renewable energy and energy
as export. One of BPC’s basic mandate was to not efficiency within the country. The SED would also
only ensure that electricity is available to all the help in taking an integrated view of the energy
citizens but to also make sure that it is reliable, situation, wherein renewable energy and energy
adequate, and above all, within the means of all conservation play complementary roles. The broad
consumers. functions of the SED will include the following.
Given the complexities of different energy sub- # Facilitation, policy formulation, planning,
sectors in the country, it is desirable to take an coordination, and monitoring
integrated and holistic approach to address myriad # Promotion of R&D in renewable energy
challenges that the country is facing in the field of and energy efficiency in association with the
energy. It is, therefore, suggested to bring petroleum engineering colleges; demonstrations and
as well as coal under the purview of the DoE, resource assessment
besides electricity, renewable energy, and energy # Capacity development at various levels, including
conservation/efficiency. In order to take on these at the Dzongkhag levels
wider responsibilities, the DoE may be transformed # Energy labelling/endorsement
into a full-fledged Ministry of Energy. Indeed, # Financing
Good Governance Plus document also mentions # Knowledge management and awareness
the formation of the Ministry of Energy and creation
Water Resources Management. This move would # Integration with other organizations and
accelerate the progress of development as envisaged developmental programmes
in the vision documents and master plans.
In the interim, the DoE may be mandated to With the SED playing a pivotal role, the following
look after not only the hydropower energy and institutional set-up is suggested to promote
renewable energy but also policies regarding renewable energy and energy efficiency.
import of petroleum fuels and coal. Thus, different # The SED would formulate guidelines, policy
departments/divisions may be created to look after measures, plans, and programmes in consultation
the specific areas, as mentioned subsequently. with Dzongkhags. The policy framework may

CHAPTER
7 RECOMMENDATIONS
be designed taking into account the district energy and energy efficiency in the emerging
needs and recommendations. The bottom-up energy scenario as well as their different aspects
approach would help in providing solutions may be undertaken by the SED through the
appropriate to the Dzongkhags concerned. dzongkhags, Industrial Development Centre,
# It may be desirable to have ‘decentralized Royal Society for Protection of Nature (RSPN),
institutional set-up’ at the Dzongkhag level. Bhutan Chambers of Commerce and Industries
Rather than creating new agencies, the relevant (BCCI), and suitable NGO(s).
existing department(s), like the Planning # The SED may establish an information centre
Department, may be designated and empowered on renewable energy and energy efficiency,
to carry out activities related to renewable which would function as a single source of
energy and energy efficiency. information.
# The SED may undertake setting up of energy
efficiency labelling programme in collaboration Figure 2 shows the suggested institutional set-
with the STQA and the Industrial Development up graphically. A detailed note on the structure
Centre. and function of the organization is given in
# The task of creating awareness at various levels, Annexure 7.1
on the potential and relevance of renewable
Ministry of Energy
Department of Hydropower
Development and Planning
Department of Hydropower Dzongkhags

Promotion and Trade
Department of Power
Engineering College
Systems
Renewable Energy
Sustainable Energy NGOs
Department
Energy conservation/ Industrial Dev. Centre

Department of Petroleum energy efficiency
Import and Trade
Department of Coal
STQA
RSPN
BCCI
NGOs
FIGURE 2 SUGGESTED INSTITUTIONAL SET-UP

CHAPTER
RECOMMENDATIONS 7
IMPLEMENTATION OF ELECTRIC VEHICLES Cost in Rs./person/km

With vast potential available for hydropower 3.50
generation, use of electricity for mass transport 3.00

and electric/hybrid vehicles for personal transport 2.50
are viable options for Bhutan. 2.00
Hybrid (petrol–electric) and electric vehicles are 1.50
now being developed by many major automobile
1.00
manufacturers worldwide.
0.50
Use of electric vehicle by the individuals as well
as for the public transport system may reduce 0
4 occupancy 3 occupancy 2 occupancy 1 occupancy
the burden of import of petrol and diesel on Level of occupancy
the Bhutanese economy. It is observed that the Petrol vehicle Electric vehicle
replacement of personnel petrol vehicle and some FIGURE 3 COST PER PERSON PER KILOMETER FOR
public transport systems such as mini buses in the PETROL VEHICLE AND ELECTRIC VEHICLE AT DIFFERENT
city like Thimphu with the electric vehicles can not OCCUPANCIES
only reduce the petrol consumption of the city but
will also help in reducing pollution. Potential for petrol saving by using electric
Total petrol consumption in 2005 was 13 775 vehicles
kilolitres, which is projected to increase to 34 105 Following assumptions have been made to calculate
kilolitres in 2015 and to 51 673 kilolitres in 2020 the estimated petrol savings.
under the business-as-usual (BAU) scenario. Petrol # Electricity consumed during one full charging
is mainly consumed by light transport vehicles such of the electric vehicle is 9 kWh.
as cars and two-wheelers. In 2000, total number # Distance travelled by electric vehicles in one full
of light vehicles was 7438, which increased to 17 charging is 80 km. Mileage of petrol vehicle is
712 in 2006. A projection has been made based on 12 km per litre.
the trend from 2000 to 2006, and it is found that # Price of electricity is Rs. 2.00 per kWh.
the number of light vehicles will be increased to # Number of days the vehicles are used in a year
48 452 in 2015 and to 73 680 in 2020 under the is 365 days.
BAU scenario. To reduce the petrol consumption # Price of petrol is Rs 45.00 per litre.
by vehicles, the government may promote the use # Average run per day per vehicle is about 15 km.
of electric vehicles by citizens. An analysis on the
potential savings in petrol accrued by using electric It is suggested that initially, about 1000 personal
vehicles is presented in the subsequent section. electric vehicles may be introduced by 2012 and
then up to 5000 vehicles by 2015 and up to
Economy of the use of electric vehicles 15 000 vehicles may be introduced by 2020. Based
An analysis has been carried out for comparing the on the assumptions given above, saving in the
economy in the use of petrol vehicle and electric amount of petrol is calculated. It is estimated that
vehicle. The result is presented in Figure 3, which by following this approach, total saving of petrol
shows the cost in Nu/km/person for different by the year 2015 will be about 2281 kilolitres,
occupancies of the vehicle. For the most common and by 2020, it will be about 6843 kilolitres.
case of two occupancy, the use of petrol vehicle The replacement of petrol vehicles with electric
costs about Rs. 1.50 per person per kilometre, vehicles will reduce the petrol demand in future
while the electric vehicle costs about Re 0.11 per and will increase the total electricity demand in
person per kilometre (Figure 3). Bhutan. Based on the above assumptions, it is
estimated that by 2015, Bhutan may save about
Nu 94 million per year, and by 2020, it will save
about Nu 280 million per year.

CHAPTER
7 RECOMMENDATIONS
CDM potential of using electric vehicles commuting between office and home. Various
There is a good potential for Clean Development organizations may also provide charging plugs in
Mechanism (CDM) by using electric vehicles. the parking place of the office building, so that
The use of electric vehicle will also help Bhutan employees may charge their vehicles whenever they
in keeping its environment clean and reducing want to. This charging facility may be available on
the greenhouse (GHG) emission because of the paying nominal fees or it may be provided free
reduction in petrol consumption and the use to the employees to promote the use of electric
of clean electric power, which is generated by vehicles in initial phase.
hydropower projects. It is estimated that by 2015, Charging stations may be set up at various
Bhutan can help in reducing about 5656 tCO2 per parking places and the charging facility can be
year, and by 2020, about 16 969 tCO2 will be provided free of cost as a subsidy to the electric
reduced per year by replacing petrol vehicles with vehicle owners.
electric vehicles. The government may introduce mini buses
running on electricity withinThimphu city and later
Strategy for the implementation of electric on from Thimphu to Paro. It is, therefore, suggested
vehicles to develop a master plan for the introduction of
The implementation of electric vehicles can be electric/hybrid vehicles in Bhutan.
initially for the office-goers, who will require

ANNEXURE 3.1
Projected socio-economic variables
Table 1 Table 2
GROSS DOMESTIC PRODUCT (NU BILLION @ 2000 PRICES) POPULATION STATISTICS (IN THOUSAND)
Year BAU HIG Year Rural Urban Transient Floating Total
regular regular and population population
2005 28.9 28.9 population population institutional
population
2006 31 31.8
2005 410.9 167.4 56.7 37.4 672.4
2007 33.3 35
2006 402.8 185 55.4 37.3 680.5
2008 35.7 38.5
2007 392.6 202.9 56.1 37.8 689.4
2009 38.3 42.3
2008 382.3 221 56.8 38.3 698.4
2010 41.1 46.6
2009 371.8 239.3 57.5 38.8 707.4
2011 44.1 51.2
2010 361.1 257.9 58.3 39.3 716.6
2012 47.4 56.4
2011 350.3 276.7 59.1 39.8 725.9
2013 50.8 62 2012 339.5 295.8 59.8 40.3 735.4
2014 54.5 68.2 2013 328.4 315.1 60.6 40.8 744.9
2015 58.5 75 2014 317.3 334.6 61.3 41.4 754.6
2016 62.8 82.5 2015 305.9 354.4 62.2 41.9 764.4
2017 67.4 90.8 2016 294.4 374.5 63 42.5 774.4
2018 72.3 99.8 2017 282.7 394.8 63.9 43 784.4
2019 77.6 109.8 2018 271 415.4 64.6 43.6 794.6
2020 83.2 120.8 2019 259 436.3 65.6 44.1 805

BAU – business-as-usual; HIG – high growth 2020 246.9 457.4 66.4 44.7 815.4
BAU – business-as-usual; HIG – high growth

ANNEXURE
3.1 PROJECTED SOCIO-ECONOMIC VARIABLES
Table 3 Table 5
GROSS DOMESTIC PRODUCT PER CAPITA (THOUSAND NU NUMBER OF COMMERCIAL ESTABLISHMENTS (SHOPS AND
@ 2000 PRICES) RESTAURANTS)
Year BAU HIG Year BAU HIG
2005 45.5 45.5 2005 5 967 5 967
2006 45.6 49.5 2006 6 385 6 564
2007 48.3 53.7 2007 6 832 7 220
2008 51.2 58.3 2008 7 310 7 942
2009 54.2 63.3 2009 7 822 8 736
2010 57.4 68.8 2010 8 369 9 610
2011 60.8 74.7 2011 8 955 10 571
2012 64.4 81.1 2012 9 582 11 628
2013 68.2 88 2013 10 252 12 791
2014 72.3 95.6 2014 10 970 14 070
2015 76.5 103.8 2015 11 738 15 477
2016 81.1 112.7 2016 12 560 17 025
2017 85.9 122.4 2017 13 439 18 727
2018 91 132.9 2018 14 380 20 600
2019 96.3 144.3 2019 15 386 22 660
2020 102 156.7 2020 16 463 24 926
BAU – business-as-usual; HIG – high growth BAU – business-as-usual; HIG – high growth
Table 4
TOURIST INFLUX (IN THOUSAND)
Year BAU HIG
2005 13.6 13.6
2006 15.7 16.5
2007 18 19.9
2008 20.7 24.1
2009 23.8 29.2
2010 27.4 35.3
2011 31.5 42.8
2012 36.2 51.7
2013 41.7 62.6
2014 47.9 75.8
2015 55.1 91.7
2016 63.4 110.9
2017 72.9 134.2
2018 83.8 162.4
2019 96.4 196.5
2020 110.9 237.8
BAU – business-as-usual; HIG – high growth

ANNEXURE
ANNEXURE 3.2 TARIFF DESIGN 4.1
List of upcoming industries
Table 1
LIST OF UPCOMING INDUSTRIES IN BHUTAN
Industries Activity Location Power demand Power
allocated
AWP Brewery Projects Manufacturing beer Gelephu 7.2 MWh 0.9
Bhutan Dairy and Agro Products Ltd Ultra high temperature (UHT) milk and fruit juice P/ling 0.44
Bhutan Brewery Pvt. Ltd Production of beer Pasakha 700 kVA 0.64
Bhutan Carbide and Chemicals Ltd Low carbon silico manganese Pasakha 11 MW 11
Bhutan Carbide and Chemicals Ltd Manufacturing magnesium metal Pasakha 12 MW 12
Bhutan Concrete Bricks Manufacturing solid bricks and hollow blocks Pasakha 0.05
Bhutan Ferro Industries Manufacturing ferro silicon Pasakha 27 MW 8.1
Bhutan Health Food Products Pvt. Ltd Manufacturing specialty fats Pasakha 1000 kW 1
Bhutan Metals Pvt. Ltd Manufacturing copper wire Pasakha 0.18
Bhutan Packaging Industry P/ling 0.25
Bhutan Polymers Company Ltd Production of woven fabrics Samtse 0.5
Bhutan Rolling Mills Pvt. Ltd Steel re-rolling Bhalujhora 1.4 MVA 3.4
Bhutan Wood Panel Manufacturing wooden products P/ling 0.27
Choden Engg Workshop Automobile workshop P/ling 0.26
Drangchu Beverage Production of soft drinks P/ling 0.4
Druk Ferro Alloys Ltd Manufacturing ferro silicon Pasakha 21.5 MVA 18
Druk Iron and Steel (Phase II) Manufacturing steel ingots Rabtengang 2.3 MW 2.3
Druk Wang Alloys Ltd Manufacturing ferro silicon Pasakha 21.5 MVA 17.5
Gyeltshen Steel Industries Manufacturing steel ingots Pasakha 9.3 MW 3.4
Jatu Wood Industries Manufacturing wooden furniture P/ling 0.09
Jigme Industries Pvt. Ltd Dolomite processing Samtse 0.45
Jigme Polytex Pvt. Ltd Polyester yarn texturing Samtse 0.75
Kenpa Pvt. Ltd Manufacturing vanaspati Pasakha 7.2 MWh 0.6
Kimpex Pvt. Ltd Stone crushing P/ling 0.13
Kimpex Pvt. Ltd Manufacturing of laundry and toilet soaps Pasakha 420 000 units 0.13
KK Iron & Steel Pvt. Ltd Induction furnace Pasakha W#$8 3.3*(15
Kuenchap Rod and Wire Industries Pvt. Ltd Manufacturing copper rod and wire Pasakha 0.1
Lhojong Emulsion Industry Bitumen emulsion P/ling 0.05
Mega Pvt. Ltd Manufacturing vanaspati, margarine, and edible oils Pasakha 1.05
Bhutan Ferro Alloys Ltd Manufacturing ferro silicon Pasakha 18 MVA 12.33
Table 1 contd...

ANNEXURE
3.2 LIS T OF UPCOMING INDUS TRIES
Table 1
CONTD...
Industries Activity Location Power demand Power
allocated
Omzin Manufacturing Company Manufacturing polyster yarn and silk fabrics Bhalujhora 0.43
Quality Gases Production of liquefied nitrogen/oxygen Pasakha 1000 KW 1
Rabten Wire Industry Manufacturing wire products Pasakha 0.26
RSA Poly Products Pvt. Ltd Manufacturing poly films and fabricks Pasakha 1200 KVA 1
RSA Polymers Manufacturing multi-layer filaments/yarn P/ling 0.65
RSA Pvt. Ltd Marble slabs Pasakha 0.75
S D Eastern Bhutan Ferro Silicon Manufacturing ferro silicon S/Jongkhar 19 MVA 17
Samphel Norbu Products Pvt. Ltd Production of livestock feeds Pasakha 0.02
Singye Vanaspati Manufacturing Company Production of vanaspati oil and fats Pasakha 0.05
Tashi Metal and Alloys Pvt. Ltd Manufacturing calcium silicide cordwire Pasakha 13.2 MVA 12
Ugen Ferro Alloys Pvt. Ltd Manufacturing ferro silicon Pasakha 20 MVA 18
Yarab Pvt. Ltd Manufacturing copper wire P/ling 0.1
Yarkey Minerals Manufacturing marble slabs, chips, and tiles Pasakha 0.43
Yarkay Poly Products Manufacturing textured polyster yarn P/ling 0.65
Yarkay Poly Products Manufacturing textured polyster yarn P/ling 0.2
Zoya Enterprise Manufacturing zinc chloride Pasakha 0.02
Bhutan Aluminum Products Pvt. Ltd Manufacturing aluminum rod and ACSR conductors Pasakha 400 KVA 0.36
Chaksampa Steel Pvt. Ltd MS ingots and structural steel Pasakha 5.5 MW 3
Dragon Sarvesh Bhutan Pvt. Ltd Manufacturing fused dolomite Pasakha 6 MW 6
Dralha and R Piyarelall Steel Co. Pvt. Ltd Manufacturing MS angles, rods Pasakha 3
Lhaki Steels and Rolling Pvt. Ltd Wire rod re-rolling, TMT bars and structural steel Pasakha 20 MW 12
Non-Ferrous Metals Extrusions Ltd Manufacturing non-ferrous metals Pasakha 7000 KW 2
Royal Government of Bhutan Dungsum cement project (1 MTPA) Nanglam 18 MW 18
S Gobain Ceramic Materials Bhutan Ltd Manufacturing silicon carbide Pasakha 26 MW 13
United Industries Pvt. Ltd Manufacturing specialty fats Pasakha 1 KVA 0.9

ANNEXURE
Projected energy demand in Bhutan,

by fuel
Projection of the demand of each fuel under different scenarios has been carried out using LEAP. Results
of the projections are given.
Abbreviations used
BAU – business-as-usual; EE – energy-efficient; HIG – high growth; HIGEE – high growth combined
with energy efficient
Table 1 Table 2
PROJECTED ELECTRICITY DEMAND (MILLION UNITS) PROJECTED FIREWOOD DEMAND (THOUSAND TONNES)
Year BAU EE HIG HIGEE Year BAU EE HIG HIGEE
2005 612 612 612 612 2005 735 735 735 735
2006 763 763 769 769 2006 749 754 744 749
2007 862 862 872 872 2007 827 837 810 820
2008 830 637 804 618
2008 2215 2017 2232 2042
2009 834 640 801 616
2009 2465 2185 2490 2217
2010 840 645 801 617
2010 2494 2206 2528 2247
2011 850 653 805 620
2011 2524 2229 2570 2280
2012 862 661 813 627
2012 2557 2253 2616 2317
2013 877 674 825 638
2013 2592 2279 2665 2355
2014 896 688 842 653
2014 2629 2307 2720 2398
2015 918 706 865 672
2015 2832 2482 3555 3167 2016 944 727 895 697
2016 2880 2518 3629 3226 2017 974 751 931 727
2017 2937 2560 3717 3295 2018 1010 780 975 763
2018 2999 2605 3813 3372 2019 1051 813 1028 807
2019 3067 2655 3920 3457 2020 1097 850 1091 859
2020 3067 2655 3921 3458

ANNEXURE
3.3 PROJECTED ENERGY DEMAND IN BHUTAN, BY FUEL
Table 3 Table 5
PROJECTED LIQUEFIED PETROLEUM GAS (LPG) DEMAND PROJECTED COAL DEMAND (THOUSAND TONNES)
(THOUSAND TONNES) Year BAU EE HIG HIGEE
Year BAU EE HIG HIGEE 2005 123.7 123.7 123.7 123.7
2005 4.34 4.34 4.34 4.34 2006 143.4 143.4 143.4 143.4
2006 4.60 4.60 4.87 4.87 2007 143.4 143.4 143.4 143.4
2007 4.96 4.96 5.31 5.31 2008 245.7 217.1 245.7 217.1
2008 5.22 5.04 5.84 5.66 2009 585.7 457.2 585.7 457.2
2009 5.66 5.31 6.37 6.19 2010 585.7 457.2 585.7 457.2
2010 6.02 5.66 6.99 6.73 2011 585.7 457.2 585.7 457.2
2011 6.37 6.02 7.61 7.35 2012 585.7 457.2 585.7 457.2
2012 6.73 6.46 8.23 7.96 2013 585.7 457.2 585.7 457.2
2013 7.17 6.81 8.94 8.67 2014 585.7 457.2 585.7 457.2
2014 7.61 7.26 9.73 9.38 2015 585.7 457.2 585.7 457.2
2015 8.05 7.61 10.53 10.09 2016 585.7 457.2 585.7 457.2
2016 8.50 8.05 11.33 10.97 2017 585.7 457.2 585.7 457.2
2017 8.94 8.50 12.30 11.86 2018 585.7 457.2 585.7 457.2
2018 9.47 9.03 13.27 12.74 2019 585.7 457.2 585.7 457.2
2019 10.00 9.47 14.34 13.81 2020 585.7 457.2 585.7 457.2
2020 10.53 10.00 15.49 14.96
Table 4 Table 6
PROJECTED KEROSENE DEMAND (THOUSAND KILOLITRES) PROJECTED DIESEL DEMAND (KILOLITRES)
Year BAU EE HIG HIGEE Year BAU EE HIG HIGEE
2005 12.5 12.5 12.5 12.5 2005 51 440 51 440 51 440 51 440
2006 12.2 12.2 11.8 12.5 2006 60 467 60 467 62 417 62 417
2007 11.9 11.9 11.0 12.5 2007 66 123 66 123 70 360 70 360
2008 11.6 11.6 10.3 12.5 2008 72 193 64 974 79 099 71 189
2009 11.4 11.4 9.7 12.5 2009 78 706 70 835 88 710 79 839
2010 11.1 11.1 9.1 9.1 2010 85 694 77 124 99 284 89 355
2011 10.7 10.7 8.1 8.1 2011 93 192 83 873 110 914 99 823
2012 10.4 10.4 7.3 7.3 2012 101 237 91 114 123 707 111 337
2013 10.1 10.1 6.5 6.5 2013 109 870 98 883 137 780 124 002
2014 9.8 9.8 5.8 5.8 2014 119 133 107 220 153 260 137 934
2015 9.5 9.5 5.2 5.2 2015 129 072 116 165 170 288 153 260
2016 9.1 9.1 3.9 3.9 2016 139 737 125 763 189 019 170 117
2017 8.7 8.7 3.0 3.0 2017 151 180 136 062 209 623 188 661
2018 8.3 8.3 2.2 2.2 2018 163 459 147 113 232 288 209 059
2019 8.0 8.0 1.7 1.7 2019 176 634 158 971 257 219 231 497
2020 7.7 7.7 1.3 1.3 2020 190 771 171 694 284 642 256 178

ANNEXURE
PROJECTED ENERGY DEMAND IN BHUTAN, BY FUEL 3.3
Table 7 Table 8
PROJECTED PETROL DEMAND (KILOLITRES) PROJECTED AVIATION TURBINE FUEL (ATF) DEMAND
Year BAU EE HIG HIGEE (KILOLITRES)
2005 13 775 13 775 13 775 13 775 Year BAU EE HIG HIGEE
2006 14 570 14 570 15 125 15 125 2005 1145 1145 1145 1145
2007 16 181 16 181 17 387 17 387 2006 1303 1303 1296 1296
2008 17 909 15 402 19 875 17 093 2007 1398 1398 1447 1447
2009 19 763 16 996 22 612 19 446 2008 1501 1501 1598 1598
2010 21 753 18 708 25 623 22 035 2009 1610 1610 1749 1749
2011 23 888 20 544 28 934 24 884 2010 1728 1728 1900 1900
2012 26 179 22 514 32 577 28 016 2011 1854 1854 2120 2120
2013 28 637 24 628 36 584 31 462 2012 1989 1989 2340 2340
2014 31 275 26 896 40 992 35 253 2013 2134 2134 2560 2560
2015 34 105 29 330 45 841 39 423 2014 2290 2290 2780 2780
2016 37 141 31 942 51 174 44 010 2015 2457 2457 3000 3000
2017 40 400 34 744 57 041 49 055 2016 2637 2637 3415 3415
2018 43 896 37 751 63 494 54 605 2017 2829 2829 3830 3830
2019 47 648 40 977 70 593 60 710 2018 3036 3036 4244 4244
2020 51 673 44 439 78 402 67 426 2019 3257 3257 4659 4659
2020 3495 3495 5074 5074

ANNEXURE
Tariff design
T
ariff design, from the point of view customer chooses the option that best meets his
of an operator, is aimed at profit requirements.
maximization, while the government’s
interest is welfare maximization and Peak load pricing
making available affordable service to the poor. Peak load pricing is a kind of pricing variation,
To maximize profits, the operator seeks prices wherein the operator would maximize his profits
that equate marginal revenue (defined as the extra by charging higher prices during the peak hours
revenue the operator receives when it increases and lower prices during the off-peak hours. The
output by one unit) and marginal costs. Different peak load pricing, however, requires sophisticated
types of options exist for designing tariffs, and some measurement of customer usage, with advanced
of them are discussed in the subsequent sections. metering technologies for energy and water sectors.
The cost of implementing these technologies,
MARGINAL COST PRICING however, must be weighed against the welfare
In case of competitive environment, marginal gains for metering before pursuing the usage of
revenue equals marginal costs. This marginal cost peak load pricing.
pricing maximizes welfare, with the interest of
the operator coinciding with the interests of the REGULATION OF THE ENERGY SECTOR
government. Irrespective of the structure of the sector, there is a
need to introduce an arms-length energy regulator,
Deviation from marginal cost pricing: multipart combining the powers of rule making (legislative) and
prices implementation and enforcement (executive) with
In case the operator possesses some market power, quasi-judicial powers of review and appeal against
its profit maximization prices would exceed the their orders (judicial). Independent regulation is
marginal cost, resulting in welfare loss unlike the required to safeguard consumer interests, especially
perfectly competitive environment. An example those of vulnerable groups and geographically
of a deviation from the marginal cost pricing distant consumers, promote efficiency and economy
is the multipart tariffs, wherein the operator in the sector, accelerate decision-making, facilitate
charges separate prices for different elements investors and others in planning and raising finances
of the service unlike in linear tariff, wherein a for the long-term investments, and supply quality
single price is charged for the service. A common services at economic prices.
example of multipart tariff is the two-part tariff The Bhutan Electricity Authority (BEA) has
in the electricity sector, where the customer pays been established under the Electricity Act, 2001,
a monthly fee for access and a usage fee for the to play the role of a regulator in the development of
consumption of electricity. the energy sector. Some of the important functions
of the Authority as per the Act include development
Optional tariffs of regulations, standards, codes, principles and
Optional tariffs are closely related to the multipart procedures; process applications; modifying and
tariff, where the operator offers the customer revoking licences and monitoring the performance
a menu of pricing plans, amongst which the of licensees and their compliance; determining/

ANNEXURE
4.1 TARIFF DESIGN
approving/reviewing tariffs; prescribing and # To progressively reflect cost of supply of

collecting fees, charges or royalties from licensees; electricity and also reduce and eliminate cross-
imposing fines, sanctions or penalties for any subsidy within a specified time frame.
breach of provisions of this Act; establishing a # To ensure that tariff is sensitive to the type of
dispute resolution process; and settling disputes consumer, time of supply, area of supply, and
and other duties or responsibilities delegated by nature/purpose for which supply is required.
the minister. # To promote renewable energy through incentives
While the BEA can play the role of a regulator built into tariffs.
in the short term, experience worldwide has
underscored the need for rule-making, decision- Some other important functions of the regulator
making or adjudicative functions to be under an would be as follows.
independent regulator outside of the government # Promoting energy efficiency and enforcing
and the legal system. Government departments various energy efficiency measures and
may be perceived as not being able to provide developing infrastructure/standards/codes for
insulation from external influences. Also, it may energy efficiency.
not be feasible to develop courts for different kinds # Promoting the growth of renewable and non-
of expertise required. In addition, independent conventional sources of energy, including solar,
regulators can also bring in more stability since mini-micro hydel, and so on. Regulator can look
they are not concerned with electoral politics but into the utilization/creation of additional funds
have to keep the interest of the public in mind. to support the development of the renewable
Further, entrusting price regulation to a regulatory energy sector for electricity generation.
body also has major advantages for governments— # Bridging the gap in people’s understanding
it provides insulation from politically unpopular of the sector, including the demand/supply
pricing decisions that need to be taken in the situation and the accompanying imperatives,
interest of the industry and creates a source of implications, and status of reforms through
expertise. public hearings and proactive information
In the foreseeable future, the government will dissemination, which are not merely perfunctory.
remain the largest player in the electricity sector This understanding is crucial for public buy-in
in the country (likely in the form of Druk Green of reforms, minimizing uncertainties in public
Power Corporation). Here, the regulator should reactions, and creating an environment that is
closely monitor the capital and revenue expenditure more conducive for foreign direct investment
of the incumbent utility and ensure that costs are (FDI).
not padded so as to get higher tariffs or that the
utility is not unduly burdened with the costs of the The success of the regulator in meeting these
government’s social obligations. objectives will require capacity, transparency,
Simultaneously, the regulator would need accountability, and a strong political and
to identify segments where private capital and administrative commitment to their effectiveness.
competition can be introduced. The regulator
would need to ensure the harmonious co-existence
of the private sector (in generation) with the natural DECENTRALIZED ENERGY GOVERNANCE
monopoly segment, transmission, likely to remain Bhutan has a well-designed framework for
in the public sector, with particular attention to decentralized planning process at the Dzongkhag
non-discriminatory access to incumbent facilities. and Gewog level. The government has established
One of the key areas that a regulator would need Dzongkhag Yargay Tshochung (DYT), or district
to focus on is tariff determination. The following development committees, giving the Dzongkhags
issues are of importance. administrative responsibilities. At the block level,
# To set multi-year tariff principles. Gewog Yargay Tshochung (GYT) has been formed

ANNEXURE
TARIFF DESIGN 4.1
for devolving administrative responsibilities to the The collection of tariff and maintaining accounts
blocks. Measures are also being taken to improve of tariff collection are the responsibilities of the
the resource base and capacity of these bodies. In community, and a village committee is set up for
the energy sector, these local bodies can play a this purpose. This experiment has been successful
major role in decentralized mini hydro projects and so far, and in future, such decentralized governance
in operation and maintenance of local distribution of small plants should be encouraged.
lines, involving the local community in billing and Bhutan is also planning to develop FDI policy
collection. for hydropower development, which will encourage
In the 1990s, small hydropower plants were IPP and captive power production. A whole
managed by the community; however, due to range of issues needs to be addressed for this to
various constraints such as lack of capacity and materialize. The DoE has suggested change in its
technical know-how required to operate and current organization structure to include additional
maintain these plants at community level, these responsibilities such as negotiating contracts with
plants were brought under the control of the Bhutan private producers, marketing hydropower projects,
Power Corporation (BPC). However, recently built and so on.
70-kW mini hydroplant at Chendenbji and 100- Ideally, regulator should look into these matters
kW hydroplant at Sengor are being transferred as an independent authority and develop suitable
to community for operation and maintenance, guidelines, regulation, and so on and advise the
with technical backstopping and support being government on policy and rules, regulations, and
provided by the Department of Energy (DoE)/BPC. acts.

ANNEXURE
4.1 TARIFF DESIGN
INDICATIVE TARIFF FOR MEDIUM SIZE HYDRO PLANT (CAPTIVE POWER GENERATION)
ASSUMPTIONS
All costs are in million Rs
Capital cost 6000 Capitalized cost of project 5748.72
Cost 5100 Debt 4024.10
Grant component 15% Equity 1724.62
Equity 30% Debt 70% Plant load 55%
factor
Return on equity 14% Interest rate 12% O&M 2% of capital cost
Repayment 15.0 years Escalation in 2.0%
period O&M
(inclusive of
moratorium)
Moratorium 0.0 years Fuel 1
consumption
Life 30 years Fuel cost 0
Construction 2 years Escalation in 0%
period fuel cost
Discount rate 12.00% Annual 481.8
generation
LEVELIZED TARIFF ESTIMATION

Year 1 2 3 4 5 6 7 8 9 10 11 12
Return on equity (ROE) 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45
Debt 4024.10 3755.83 3487.56 3219.28 2951.01 2682.74 2414.46 2146.19 1877.92 1609.64 1341.37 1073.09
Capital repayment 268.27 268.27 268.27 268.27 268.27 268.27 268.27 268.27 268.27 268.27 268.27 268.27
Depreciation 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00
Interest payment 482.89 450.70 418.51 386.31 354.12 321.93 289.74 257.54 225.35 193.16 160.96 128.77
O&M expenses 76.50 78.03 79.59 81.18 82.81 84.46 86.15 87.87 89.63 91.42 93.25 95.12
Total expenses 970.84 940.18 909.54 878.94 848.37 817.84 787.33 756.86 726.43 696.03 665.66 635.34
Sales 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80
Tariff 2.02 1.95 1.89 1.82 1.76 1.70 1.63 1.57 1.51 1.44 1.38 1.32
Levelized tariff 1.60 1.60 1.60 1.60 1.60 1.60 1.60 1.60 1.60 1.60 1.60 1.60
Discounted ROE 1944.89
Discounted interest payments 2196.93
Discounted O&M 718.75
Discounted principle 1333.33
Repayment
Discounted expenses 6193.90
Discounted sales 3880.99
Levelized tariff (Rs/kWh) 1.60

ANNEXURE
TARIFF DESIGN 4.1
Capacity 100 MW Allowance of funds used during construction

Capital cost 5100 Interest Year 1 Year 2 Total IDC
during
construction
(IDC)
Debt 3570 Expenditure 40% 60%
Equity 1530 2040 3060
Loan 1836 1734 3570
1836 3570
Equity 204.00 1326.00 1530.00
Interest on 220.32 428.4 648.72
loan
Levelized generation cost 481.8 1.60
Royalty sale 5% 24.09 0.3
Cost of rest of units 95% 457.71 1.66
13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45 241.45
804.82 536.55 268.27 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
268.27 268.27 268.27 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00 170.00
96.58 64.39 32.19 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
97.02 98.96 100.94 102.96 105.02 107.12 109.26 111.45 113.67 115.95 118.27 120.63 123.05 125.51 128.02 130.58 133.19 135.85
605.05 574.79 544.58 514.41 516.46 518.56 520.71 522.89 525.12 527.39 529.71 532.08 534.49 536.95 539.46 542.02 544.63 547.30
481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80
1.26 1.19 1.13 1.07 1.07 1.08 1.08 1.09 1.09 1.09 1.10 1.10 1.11 1.11 1.12 1.12 1.13 1.14
1.60 1.60 1.60 1.60 1.60 1.60 1.60 1.60

ANNEXURE
4.1 TARIFF DESIGN
INDICATIVE TARIFF CALCULATION FOR MEDIUM SIZE HYDRO PLANT FOR INDEPENDENT POWER PRODUCTION (IPP)
ASSUMPTIONS
Capital cost 6000 Capitalized cost of project 6572.40

Cost 6000 Debt 4600.68
Grant component 0% Equity 1971.72
Equity 30% Debt 70% Plant load factor 55%
Repayment 15.0 years Escalation in 2.0%
period O&M
(inclusive of
moratorium)
Moratorium 0.0 years Fuel consumption 1
Life 30 years Fuel cost 0
Construction 2 years Escalation in fuel 0%
Period cost
Discount rate 12.00% Annual 481.8
generation

Year 1 2 3 4 5 6 7 8 9 10 11 12
Return on equity (ROE) 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04
Debt 4600.68 4293.97 3987.26 3680.54 3373.83 3067.12 2760.41 2453.70 2146.98 1840.27 1533.56 1226.85
Capital repayment 306.71 306.71 306.71 306.71 306.71 306.71 306.71 306.71 306.71 306.71 306.71 306.71
Depreciation 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00
Interest payment 414.06 386.46 358.85 331.25 303.64 276.04 248.44 220.83 193.23 165.62 138.02 110.42
O&M expenses 90.00 91.80 93.64 95.51 97.42 99.37 101.35 103.38 105.45 107.56 109.71 111.90
Total expenses 980.10 954.30 928.53 902.80 877.10 851.45 825.83 800.26 774.72 749.22 723.77 698.36
Sales 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80
Tariff 2.03 1.98 1.93 1.87 1.82 1.77 1.71 1.66 1.61 1.56 1.50 1.45
Levelized tariff 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68
Discounted principle repayment 1568.63

ANNEXURE
TARIFF DESIGN 4.1
Capacity 100 MW Allowance of funds used during construction

Capital cost 6000 Interest during Year 1 Year 2 Total IDC
construction
(IDC)
Debt 4200 Expenditure 40% 60%
Equity 1800 2400 3600
Loan 2160 2040 4200
2160 4200
Equity 240.00 1560.00 1800.00
Interest on 194.4 378 572.4
loan
Levelized 481.8 1.68
generation cost
Cost of rest of 90% 433.62 1.83
units
13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04 276.04
920.14 613.42 306.71 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
306.71 306.71 306.71 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00
82.81 55.21 27.60 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
114.14 116.42 118.75 121.13 123.55 126.02 128.54 131.11 133.74 136.41 139.14 141.92 144.76 147.65 150.61 153.62 156.69 159.83
672.99 647.67 622.40 597.17 599.59 602.06 604.58 607.15 609.78 612.45 615.18 617.96 620.80 623.70 626.65 629.66 632.73 635.87
481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80 481.80
1.40 1.34 1.29 1.24 1.24 1.25 1.25 1.26 1.27 1.27 1.28 1.28 1.29 1.29 1.30 1.31 1.31 1.32
1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68

ANNEXURE
4.1 TARIFF DESIGN
INDICATIVE TARIFF CALCULATIONS FOR CHAMKAR HYDROPOWER PLANT - LARGE HYDRO POWER PLANT WITHOUT GRANT
ASSUMPTIONS Capital cost as per Masterplan in $ Estimated cost with 5% escalation in 2007
Capital cost 37 520 546 573.3 601.965 632.06325 25 282.53
Cost 37 520 1.05
Grant component 0%
Capacity 670 MW Net generation (MU) 3207

Return on equity 14% Interest rate 9% O&M 1.5% of capital cost
Repayment period 15.0 years Escalation in O&M 2.0%

(inclusive of moratorium)
Life 30 years Fuel cost 0 Discount rate 12.00%
Construction period 6 years Escalation in fuel cost 0%

Year 1 2 3 4 5 6 7 8 9 10 11 12 13
Return on equity (ROE) 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39
Debt 33189.82 30977.16 28764.51 26551.85 24339.20 22126.54 19913.89 17701.24 15488.58 13275.93 11063.27 8850.62 6637.96
Capital repayment 2212.65 2212.65 2212.65 2212.65 2212.65 2212.65 2212.65 2212.65 2212.65 2212.65 2212.65 2212.65 2212.65
Depreciation 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67
Interest payment 2987.08 2787.94 2588.81 2389.67 2190.53 1991.39 1792.25 1593.11 1393.97 1194.83 995.69 796.56 597.42
O&M expenses 562.80 574.06 585.54 597.25 609.19 621.38 633.80 646.48 659.41 672.60 686.05 699.77 713.77
Total expenses 6791.94 6604.06 6416.40 6228.97 6041.78 5854.82 5668.11 5481.65 5295.44 5109.49 4923.80 4738.38 4553.24
Sales 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00
Tariff 2.12 2.06 2.00 1.94 1.88 1.83 1.77 1.71 1.65 1.59 1.54 1.48 1.42
Levelized tariff 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73
Discounted depreciation 9809.15
Total cost of generation 5552.66

Revenue from royalty sale 15% 481.05 0.30 144.32
Revenue from export 85% 2725.95 1.80 4906.71
Total revenue 5051.03
Net revenue -501.63

ANNEXURE
TARIFF DESIGN 4.1
Allowance of funds used during construction Capitalized 47414.02

cost of
project
Capital cost 37 520 Interest during Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total IDC Debt 33 189.82
construction (IDC)
Debt 26 264 Expenditure 10% 20% 25% 20% 15% 10% Equity 14 224.21
Equity 11 256 3752 7504 9380 7504 5628 3752
Loan 3377 6753.6 8442 6753.6 938 0 26 264
3377 10 130 18 572 25 326 26 264 26 264
Equity 375.20 750.40 938.00 750.40 4690.00 3752.00 11 256.00
Unit (GWh) Tariff Interest on loan 303.912 911.736 1671.516 2279.34 2363.76 2363.76 9894.024
Levelized 3207 1.73
generation cost
Cost of rest of 85% 2725.95 1.98
units
14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39 1991.39
4425.31 2212.65
2212.65 2212.65
1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67 1250.67
398.28 199.14 0.00
728.04 742.60 757.45 772.60 788.06 803.82 819.89 836.29 853.02 870.08 887.48 905.23 923.33 941.80 960.64 979.85 999.45
4368.38 4183.80 3999.51 4014.66 4030.11 4045.87 4061.95 4078.35 4095.07 4112.13 4129.53 4147.28 4165.39 4183.86 4202.69 4221.90 4241.50
3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00 3207.00
1.36 1.30 1.25 1.25 1.26 1.26 1.27 1.27 1.28 1.28 1.29 1.29 1.30 1.30 1.31 1.32 1.32
1.73 1.73 1.73 1.73 1.73 1.73 1.73

ANNEXURE
4.1 TARIFF DESIGN
INDICATIVE TARIFF CALCULATIONS FOR DAGACHU HYDROPOWER PLANT WITHOUT GRANT

ASSUMPTIONS
Capital cost 8208
Cost 8208
Grant component 0%
Capacity 651 MW Generation 500 GWh

Equity 25% Debt 75% Plant load factor 0.41
Repayment period 15.0 years Escalation in O&M 4.0%
(inclusive of moratorium)

Year 1 2 3 4 5 6 7 8 9 10 11 12 13
Debt 7413.75 6919.50 6425.25 5931.00 5436.75 4942.50 4448.25 3954.00 3459.75 2965.50 2471.25 1977.00 1482.75
Depreciation 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60
Loan repayment 955.67 910.19 864.72 819.25 773.78 728.31 682.84 637.37
O&M expenses 82.08 85.36 88.78 92.33 96.02 99.86 103.86 108.01 112.33 116.83 121.50 126.36 131.41
Total expenses 1383.72 1341.53 1299.48 1257.56 1215.78 1174.15 1132.67 1091.35 1050.20 1009.23 968.43 927.82 887.40
Sales 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00


Net revenue -330.88

ANNEXURE
TARIFF DESIGN 4.1
Capitalized cost of project 9885.00

Debt 7413.75
Capital cost 8208 Total interest Equity 2471.25
during
construction
Debt 6156 1677
Equity 2052
Levelized generation 500 2.24

cost

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
345.98 345.98 345.98 345.98 345.98 345.98 345.98 345.98 345.98 345.98 345.98 345.98 345.98 345.98 345.98 345.98 345.98
988.50 494.25
494.25 494.25
273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60 273.60
90.94 45.47
136.67 142.14 147.82 153.73 159.88 166.28 172.93 179.85 187.04 194.52 202.30 210.40 218.81 227.56 236.67 246.13 255.98
847.19 807.18 767.40 773.31 779.46 785.85 792.51 799.42 806.62 814.10 821.88 829.97 838.39 847.14 856.24 865.71 875.55
500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00
2.24 2.24 2.24 2.24 2.24 2.24 2.24

ANNEXURE
4.1 TARIFF DESIGN
INDICATIVE TARIFF CALCULATIONS FOR CHAMKAR HYDROPOWER PLANT - LARGE HYDRO POWER PLANT WITHOUT GRANT
ASSUMPTIONS Capital cost as per Masterplan in $ Estimated cost with 5% escalation in 2007
Capital cost 37 520 546 573.3 601.965 632.06325 25282.53
Cost 37 520 1.05
Grant component 0%
Capacity 670 MW Net generation (MU) 3207

Repayment period (inclusive 15.0 years Escalation in O&M 2.0%
of moratorium)

Year 1 2 3 4 5 6 7 8 9 10 11 12 13
Debt 102478.50 95646.60 88814.70 81982.80 75150.90 68319.00 61487.10 54655.20 47823.30 40991.40 34159.50 27327.60 20495.70
Depreciation 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94
O&M expenses 835.18 851.89 868.92 886.30 904.03 922.11 940.55 959.36 978.55 998.12 1018.08 1038.44 1059.21
Total expenses 13597.29 12999.12 12401.29 11803.80 11206.65 10609.86 10013.43 9417.37 8821.69 8226.39 7631.48 7036.97 6442.87
Sales 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00
Discounted fuel cost 0.00
Discounted. expenses 86996.27

Net revenue 614.66

ANNEXURE
TARIFF DESIGN 4.1
Allowance of funds used during construction Capitalized 47414.02

cost of
project
Capital cost 37 520 Interest during Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total IDC Debt 33 189.82
construction
(IDC)
Debt 26 264 Expenditure 10% 20% 25% 20% 15% 10% Equity 14 224.21
Equity 11 256 3752 7504 9380 7504 5628 3752
Loan 3377 6753.6 8442 6753.6 938 0 26264
3377 10130 18572 25326 26264 26264
Equity 375.20 750.40 938.00 750.40 4690.00 3752.00 11256.00
Units (GWh) Tariff Interest on loan 303.912 911.736 1671.516 2279.34 2363.76 2363.76 9894.024
Levelized 3207 1.73
generation cost
Cost of rest of 85% 2725.95 1.98
units
14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
755.10 755.10 755.10 755.10 755.10 755.10 755.10 755.10 755.10 755.10 755.10 755.10 755.10 755.10 755.10 755.10 755.10
13663.80 6831.90
6831.90 6831.90
2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94 2783.94
1229.74 614.87
1080.40 1102.00 1124.05 1146.53 1169.46 1192.85 1216.70 1241.04 1265.86 1291.17 1317.00 1343.34 1370.20 1397.61 1425.56 1454.07 1483.15
5849.18 5255.92 4663.09 4685.57 4708.50 4731.89 4755.75 4780.08 4804.90 4830.22 4856.04 4882.38 4909.25 4936.65 4964.61 4993.12 5022.20
6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00 6918.00
1.56 1.56 1.56 1.56 1.56 1.56 1.56

4.2
ANNEXURE
120
INDICATIVE TARIFF CALCULATIONS FOR BIOMASS BASED POWER PLANT
Assumptions
Cost Rs 50 million/MW
Grant 10%

Repayment period (inclusive of 10.0 years Escalation in O&M 2.0%
financial analysis is given.
ANNEXURE 4.2
moratorium)
Construction Period 2 years Escalation in fuel cost 2% Capital recovery factor
Capacity 5 MW Allowance of funds used during construction Capitalized cost of project 246.26
Capital cost 225 Interest Year 1 Year 2 Total IDC Debt 172.38

During
Construction
Debt 157.5 7.09 14.18 21.26 Equity 73.88
Equity 67.5
TECHNO-ECONOMIC AN ALYSIS DETAIL S OF 5-MW BIOMASS-BASED POWER PL ANT
Levelized generation cost 30.66 3.38

a 5-MW biomass-based power plant
Techno-economic analysis details of
A techno-economic analysis of 5-MW biomass-based power plant has been carried out and the detailed
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Return on equity (ROE) 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34 10.34
Debt 172.38 155.15 137.91 120.67 103.43 86.19 68.95 51.72 34.48 17.24 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Capital repayment 17.24 17.24 17.24 17.24 17.24 17.24 17.24 17.24 17.24 17.24 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Depreciation 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25
Interest payment 15.51 13.96 12.41 10.86 9.31 7.76 6.21 4.65 3.10 1.55 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Loan repayment 26.76 25.21 23.66 22.11 20.56 19.01 17.46 15.90
Fuel cost 61.32 62.55 63.80 65.07 66.37 67.70 69.06 70.44 71.85 73.28 74.75 76.24 77.77 79.32 80.91 82.53 84.18 85.86 87.58 89.33
O&M expenses 4.50 4.59 4.68 4.78 4.87 4.97 5.07 5.17 5.27 5.38 5.49 5.60 5.71 5.82 5.94 6.06 6.18 6.30 6.43 6.56
Depreciation 10.13 10.13 10.13 10.13 10.13 10.13 10.13 10.13 10.13 10.13 10.13 10.13 10.13 10.13 10.13
Cumulative depreciation 10.13 20.25 30.38 40.50 50.63 60.75 70.88 81.00 91.13 101.25
Total expenses 102.93 102.69 102.48 102.30 102.15 102.02 101.92 101.85 101.81 101.81 101.83 103.43 105.07 106.74 108.44 110.18 111.95 113.76 115.60 117.48
Sales (MU) 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66 30.66
Tariff 3.36 3.35 3.34 3.34 3.33 3.33 3.32 3.32 3.32 3.32 3.32 3.37 3.43 3.48 3.54 3.59 3.65 3.71 3.77 3.83
Levelized tariff 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38
Discounted fuel cost 518.74
Discounted principle repayment 84.03
Discounted. expenses 774.33
Total cost of generation (Million Rs) 103.66

Revenue from export (Million Rs) 100% 103.67 1.80 186.60
TECHNO-ECONOMIC AN ALYSIS DETAIL S OF 5-MW BIOMASS-BASED POWER PL ANT

Net revenue (Million Rs) 82.93
121
4.2
ANNEXURE
ANNEXURE
ANNEXURE 4.3 BIOMASS DENSIFICATION TECHNOLOGIES 4.3
Biomass densification technologies
M
any non-woody biomass residues
Table 1
cannot be used efficiently, as
BULK DENSITY OF SELECTED LOOSE BIOMASS
they have low bulk densities.
For example, the bulk density of Biomass material Bulk density (kg/m3)
majority of the agro-residues lies in the low range of Bagasse pith 74

50–200 kg/m3 (Table 1) as compared to 800 kg/m3 Bamboo dust 205
for the coal of the same size. This necessitates huge Coffee dust 215
storage space. This is combined with difficulty in Coir pith 47
handling and higher transportation cost. All these
Cotton shell (pulverized) 79
factors make them uneconomical as a marketable
Groundnut shell 165
commodity for their widespread utilization over
longer distances. Also, low bulk densities and loose Jute dust 74
nature of available biomass are associated with Mustard stalk (pulverized) 208
faster burning of fuels, resulting in higher flue gas Rice husk 235
losses (lower operating thermal efficiencies) and Source Biomass thermo-chemical characterization,
emissions in the form of fly ash or particulates IIT Delhi, 2002
in the atmosphere. This makes them poor quality # It is cheaper than coal.
biomass fuel. In order to improve the marketability # It has consistent quality and size.
of the available loose biomass and exploit this # It has better thermal efficiencies than loose
renewable and sustainable source of energy, pre- biomass.
processing becomes necessary. # It has high specific density (800–1200 kg/m3)
Densification of biomass can be done by using compared to loose biomass (50–200 kg/m3).
briquetting or pelletizing technology, which # It is easy to handle.
compresses loose biomass into densified form # It requires less storage space.
called briquettes or pellets. This takes care of the # It involves low handling and transportation
low bulk density of biomass and helps in reducing cost.
transportation and storage cost and improves the
quality of biomass so that it could be used as a APPROPRIATE BIOMASS RESIDUE FOR
better combustible fuel. BRIQUETTING
Densified briquette/pellet produced from Almost all types of biomass can be densified.
biomass is a fairly good substitute for coal, lignite, However, there are many factors that need to
and firewood, and offers several advantages. be considered before biomass qualifies as an
Densified briquette is a renewable and sustainable appropriate feedstock for briquetting. The main
source of energy. It has the following advantages. characteristics of appropriate biomass residue

ANNEXURE
4.3 BIOMASS DENSIFICATION TECHNOLOGIES
for briquetting are described in the subsequent making the bonding during compaction strong.
sections. Binders, that is, high viscous bonding media,
such as tar and other molecular organic liquid or
Moisture content cow dung, are used in low-pressure compaction
Higher moisture content poses problem in grinding, to enhance adhesion among biomass particles by
and higher energy is required for drying operation. creating solid–liquid bridges. Lignin in biomass
Therefore, biomass with lower moisture content, helps in creating such bonds due to its softening
preferably below 10%–15%, is a more attractive at higher temperatures and its adsorption on solid
feedstock for briquetting. particle layers, which can contact, or penetrate
into, each other. The strength of the resulting
Ash content and composition agglomeration depends on the type of interaction
Majority of biomass residues (except rice husk and the material characteristics. Selected important
with 20% ash) have low ash content, but they characteristics and their significance are discussed
contain higher percentages of alkaline (especially in the following sections.
potash) minerals. They also contribute towards
lowering sintering temperature, leading to ash Effect of particle size
deposition, and higher ash content increases the Granular biomass material of size 6-8 mm, with
slagging tendency, which becomes more intense about 10%–20% powdery (< 4 mesh) material,
in biomass with more than 4% ash. normally gives best results. Though high-pressure
(1000–1500 bar) compaction machines such
Flow characteristic as piston press or screw extruder can produce
Finer granular material with uniform size flows briquettes from larger particle size biomass, they
easily in fuel hoppers and storage bins/silos. can lead to the choking of the entrance to ram
Thus, some of the appropriate biomass material or die. Condensation of vapour released from
for briquetting includes saw dust, coffee husk, larger particles on finer particles can create lumps,
groundnut shell, pulverized mustard stalk, cotton affecting free flow. However, only finer material is
sticks, and so on. not always good due to low density and flowability,
and the presence of particles of varying size
Binding mechanism of densification improves the packing dynamics, contributing to
higher strength.
Briquetting is one of the several agglomeration
techniques used for the densification of biomass
Effect of moisture
residues. On the basis of compaction, briquetting
Moisture content is a very critical factor. Right
technologies can be classified as follows.
amount of moisture (7%–10%) develops self-
# High pressure compaction
bonding properties in lignocellulosic substances
# Medium pressure compaction
at elevated temperatures and pressures prevailing
# Low pressure compaction
in piston press and screw extruder briquetting
machines. Higher moisture content can result
Normally, binders are not required in high- and
in poor and weak briquettes with cracks due to
medium-pressure compaction, but sometimes,
the escape of steam and also results in erratic
preheating of biomass is carried out to enhance the
operation due to the choking of feed flow
compaction process. In all compaction processes,
because of steam formation. It is also important
individual particles are pressed together in a
to maintain the moisture content in input feed
confined volume. In case of biomass, the binding
material so as to ensure that briquettes produced
mechanism under pressure can be divided into
have moisture content higher than the equilibrium
cohesion and adhesion forces, van der Waal’s
value, otherwise it would regain moisture from the
attractive forces between solid particles, and
atmosphere, resulting in swelling during briquette
mechanical interlocking bonds under pressure,

ANNEXURE
BIOMASS DENSIFICATION TECHNOLOGIES 4.3
storage and transportation stages, and would sugar mill waste mud (commonly called as press
disintegrate when exposed to humid conditions. mud), jute waste, coir pith, and so on as raw
materials. All these biomass briquettes, except
Effect of biomass feed temperature press mud, have a calorific value of the order of
At higher temperatures, moisture of biomass gets 3800–4000 kcal/kg, which is considered good.
converted into steam under higher prevailing Commercially, briquetting technologies used
pressures, which hydrolyses the hemicellulose and for biomass without binder include the briquetting
lignin portion of biomass into lower molecular machine based on
carbohydrates, lignin products, sugar polymers, # screw press and
and other derivatives. These act like in situ binding # ram-piston press technology.
material. Better compaction, along with higher
biomass feed temperature and pressure, results in In both the piston press and screw press
briquettes with higher density and strength (Figure technologies, the application of high pressure
1). This also softens the fibres and their resistance increases the temperature of biomass, and lignin
to briquetting, which results in lower power present in the biomass liquefies and acts as a
requirements and reduction in wear of the contact binder.
parts. However, the temperature should be kept
lower than 300 °C, as beyond this temperature, Ram-piston press technology
decomposition of biomass starts. Biomass briquetting using ram-piston technology
Briquetting can be done with or without a binder involves drying, grinding, sieving, and compacting.
material. No binders are generally required in Moisture is removed from the loose biomass with
high-pressure briquetting. Prior to its introduction the help of a dryer, and then it is ground in a
into the briquetting machine, biomass has to be hammer mill grinder. The ground material is then
disintegrated into small size and then dried so separated from the air by using cyclone separator.
that the moisture content is in the range of about It is then sieved and stored in the bin above hopper
12%–15%. Briquetting plants set up so far in India for ensuring continuous flow of biomass material
are using saw dust, bamboo dust, groundnut shell, into the press. In piston press technology, biomass
mustard stalk, cotton stalk, coffee husk, bagasse, is punched into a die by a reciprocating ram to
Density of briquette (g/cm3) Density of briquette (g/cm3)

Initial bulk density of 1.05 Initial bulk density of
1.8 ground mustard stalk
groundnut shell after grinding
(zero moisture content)
3 0.95 (zero moisture content)
1.6 =0.208 g/cm =0.268 g/cm3
0.85
1.4
0.75
1.2
0.65
1.0
0.8 0.55
50 90 130 170 210 250
50 90 130 170 210 250 2
2 Pressure (kg/cm )
Pressure (kg/cm )
120 °C 100 °C 80 °C 60 °C 120 °C 100 °C 80 °C 60 °C
Room temperature Room temperature
(a) Mustard stalk (b) Groundnut shell
FIGURE 1 VARIATION IN BRIQUETTE DENSITY WITH PRESSURE AT DIFFERENT BIOMASS FEED TEMPERATURE:
(A) MUSTARD STALK, (B) GROUNDNUT SHELL

ANNEXURE
produce briquettes (Figure 2). The ram moves

Table 2
about 250–300 times per minute in the process.
CONTRIBUTION OF INPUT COST IN UNIT COST OF
In briquetting machine, the wear of contact parts,
BRIQUETTE FOR COARSE GRANULAR WET MATERIALS
here, ram and piston, is a major issue and requires
frequent maintenance and/or replacement. The Briquetting machine production capacity (kg/hour)
average frequencies of replacement for some of Input cost 250 500 750 1000 1500 2250
the machine components are 300 hours (for ram, component
scrapper, and wear rings) and 500 hours (taper Capital 19.2 14.6 12.1 9.7 8.8 7.7
and split die, and hammers). Raw material 41.3 54.5 59.6 57.1 64.3 67.2
In India, commercially available piston press Operation 10.1 6.6 4.8 4.4 3.3 3.2
briquetting machines are commonly used in Electricity 25.5 20.3 19.9 24.7 19.9 18.0
different parts of the country. They are available
Repair and 3.9 4.0 3.6 4.1 3.7 3.9
in different capacities, ranging from 250 kg/ maintenance
hour to 2250 kg/hour. Table 2 gives the share of
Source Tripathi et al. (1998)
various input costs in the production of biomass
briquettes. It can be seen that at higher production
capacities, the raw material contributes more as
input cost, and the share of other costs diminishes Table 3
due to scale of production. Table 3 gives the power
POWER REQUIREMENT FOR BRIQUETTING UNITS
requirement for machines with different capacities
Briquetting Power requirement (kW)
for briquetting various types of biomass materials.
production
Power requirement is higher for higher capacity
capacity
machines. Production capacity increases from finer (kg/hour)
to coarser to stalky biomass due to increasing pre- Fine granular Coarse granulated Stalky material
processing requirement of biomass. Wet biomass
Dry Wet Dry Wet Dry Wet
requires higher power for additional drying
250 17.5 26.5 36.0 45.0 43.5 52.5
operation in order to bring the moisture content in
feed material to uniform desired value for smooth 500 25.0 34.0 43.5 52.5 51.0 60.0
operation as well as for generating better quality 750 32.5 41.5 58.5 67.5 73.5 82.5
briquettes. 1000 50.5 65.5 101.0 116.0 116.0 131.0
1500 65.5 80.5 108.5 123.5 123.5 138.5
Screw press technology
2250 98.0 113.0 141.0 156.0 156.0 171.0
In this process, biomass is dried to get an optimum
moisture content value by passing hot air produced Source Tripathi et al. (1998)
Cyclone
Flash drying
column Centrifugal fan
Rotary
air lock Holding bin
Screw Turbo
conveyor mill Hammer mill
Briquetting press
Hot air grinder
Generator
FIGURE 2 RAM PISTON TYPE BRIQUETTING PRESS

ANNEXURE
by burning part of briquettes in furnace. Using

Table 4
heated oil obtained in heat exchanger, the biomass
COMPARISON OF A PISTON PRESS AND A SCREW
is further preheated to about 100–120 °C so as
EXTRUDER
to minimize wear of the die and improve the true
density of the briquettes formed. This preheated Parameter Piston press Screw extruder
material is then fed to the screw extruder, Optimum moisture content 10%–15% 8%–9%
where revolving screw (at about 600–700 RPM) of raw material
continuously compacts the material through a Wear of contact parts Lower Higher
tapered die, which is heated externally to reduce Output from machine In strokes Continuous
friction between the biomass and die surface Power consumption 50 kWh/tonne 60 kWh/tonne
(Figure 3). The outer surface of the briquettes Density of briquette 1–1.2 g/cm3 1–1.4 g/cm3
obtained through this technology is partially
Maintenance Higher Lower
carbonized and has a hole in the centre.
Combustion performance Good Better
The briquettes extruded using screw press are
of briquettes
more homogeneous (as output is continuous and
Homogeneity of briquettes Non-homogenous Homogenous
not in strokes), with better crushing strength and
combustion properties (due to large combustion Source FAO Field Document No 46, 1996
area per unit weight). Since outer surface of the
briquettes is carbonized, it facilitates easy and Pelletizing machine
clean ignition, and this impervious layer provides Biomass with very low bulk density is normally
protection from moisture ingress, thereby increasing densified using flat die pelletizing technique.
the storage life of the briquettes. However, power Pelletizing generally requires conditioning of
consumption and wear of screw are higher than biomass material either by mixing binder or raising
those experienced in ram-piston-type reciprocating the temperature of the biomass by direct addition
machines. of steam. The material is dropped in the pressing
Table 4 shows a comparison between a piston chamber of the pellet mill, where it builds a carpet
press and a screw extruder. on the die surface. The rollers roll over this layer
and compress it through tapered die holes. The
pressing force keeps on increasing during rolling
in the direction of die holes. With every roll pass,
1 1 Hopper; 2 Electric motor/diesel engine; 3 Engine wheel;

4 Engine pulley; 5 Main pulley; 6 Bearing house;
7 Pre-heater outer cylinder; 8 Pre-heater inner cylinder;
9 Die heater exhaust pipe;
10 Die heater (biomass fired) upper portion;
2 7 11 Die heater; 12 Briquette; 13 Die;
8
A 14 Screw; 15 Screw housing.
9
4 10
Electric Section A–A
A
motor/ 15 7
8 9
3 diesel 6
5 11 12
engine
10
14 13
FIGURE 3 SCHEMATIC OF SCREW BRIQUETTING MACHINE WITH BIOMASS STOVE DIE HEATER

ANNEXURE
a small disc is formed in the die hole, which gets work with rotary motion, the power consumption
attached to the pressed piece already in the die levels are lower. The processing requirements are
hole. The plugs are uniformly pushed forward and also relatively less rigid for pelletizing.
hot pellets are ejected at a temperature of about 50–
90 °C, which are cooled on conveyor belts before LOW-DENSITY BRIQUETTES USING BINDER
their storage (Figure 4). Compared to briquetting In remote areas, for decentralized operation, a
machine, pellet mills are simpler, and since they simple low-pressure briquettng technique using
binder material like tar or cow dung is generally
adopted. The Energy and Resources Institute
(TERI), New Delhi, has developed a simple screw
extruder (Figure 5) coupled to a small motor,
which produces medium-density briquettes
(400–600 kg/m3). The system was operated
in village Dhanwas in Haryana for converting
locally available agro-residues (mustard stalk)
into briquettes (after manual preprocessing like
chopping and pulverizing) using cow dung as a
binder material. These briquettes were sold in
local area as fuel substitute to coal in roadside
restaurants (called dhabas) and as gasifier fuel to
provide electricity to village community and for
operating the briquetting machine (Raman et al.
1993).
Recently, TERI has successfully carried out
feasibility study for making briquettes from oil
refinery waste sludge by mixing it with locally
available loose biomass material. This would not
only take care of the waste disposal problem of
hazardous waste from oil refineries but also produce
easy-to-use briquettes, which can substitute coal
in the surrounding region (TERI 2001).
In IIT Delhi, a simple briquetting plant operated
by hand mould was developed for making beehive
charcoal briquette for using it as a clean burning
FIGURE 4 SCHEMATIC OF PELLETIZING MACHINE fuel, substituting charcoal. Locally available leafy
biomass or pine needles are carbonized
using simple pyrolyser, which is prepared
using 200 litres of used oil barrel. This
Hopper
Biomass briquette is then mixed with suitable binding
Gear box Screw extruder material like clay and cow dung, and
Coupling Ball (spiral) the mixture is prepared using adequate
bearing
quantity of water. This material is then
pressed into hand mould to form large
cylindrical briquettes of about 90 mm
height and 125 mm diameter, with
several (about 19) parallel vertical holes
FIGURE 5 LOW-DENSITY SCREW EXTRUDING BRIQUETTING MACHINE in it (Figure 6). One person can make

ANNEXURE
FIGURE 6 LOW-DENSITY BEEHIVE BRIQUETTING MOULD
about 30 briquettes (weighing about 0.5 kg after powder, the calorific value is about 18 MJ per
drying) per hour if charcoal–clay mixture is kept kg, or 9 MJ per briquette, and one briquette can
ready. These briquettes after drying can be used in burn for about an hour. Normally, single briquette
angethi chulha, which burns slowly for long duration is used in Indian chulha, but multiple vertically
without releasing any smoke. These are becoming stacked briquettes for long duration operation are
popular as livelihood option in rural areas. With commonly used in high altitude areas of Tibet.
about 20% clay content in hardwood charcoal

ANNEXURE 4.4
Bioenergy technologies for thermal

applications – potential biomass
technology options
INTRODUCTION of combustion is to start the process, as high (at

Biomass can be utilized for different purposes least 550 °C) temperature is required for the
such as cooking, process heating, electricity ignition of biomass. However, once ignition takes
generation, steam generation, mechanical or shaft place, it is difficult to stop the combustion process
power applications, as well as producing variety if sufficient air supply is available till complete
of chemicals as by-products. Various biomass combustion converts the biomass into residual
conversion processes can be broadly classified into ash. Figure 1 shows the fire triangle, emphasizing
the following categories. essential components like fuel, air, and heat, which
# Thermo-chemical permit fire/combustion to continue to grow. Fire
$ Combustion can be extinguished either by removing fuel or by
- Fixed bed or grate-fired smothering (removing air) or by cooling (spraying
- Suspension burners with water).
- Fluidized bed systems Biomass combustion is being used for various
$ Pyrolysis useful applications such as electricity generation,
$ Gasification process heating, and cogeneration (simultaneous,
- Updraft (countercurrent) sequential production of electricity and process
- Downdraft (co-current) heat). With rising prices of fossil fuels, biomass
- Cross draft is gaining importance, and there is increasing
- Fluidized bed refinement of the biomass combustion process to
$ Liquefaction exploit its energy content. In order to harness the
$ Ammonia production energy content of the biomass to the maximum,
# Chemical: acid hydrolysis it is important to understand the properties of
# Biochemical biomass fuels and fundamentals of numerous
$ Anaerobic digestion to produce methane complex reactions associated with their oxidation
$ Ethanol fermentation to carbon dioxide and water. This can help in
# Physical: densification into briquettes
Only a few of these technologies are covered Heat

under the planned Global Environment Facility
(GEF) project, given the scale and type of target Heat
industries concerned. Other technologies are yet transfer
to be commercialized, for their scale of operation
is not suitable for the target intervention clusters.
COMBUSTION Fuel
Mass
Air
Combustion is the direct process of converting transfer

biomass into usable energy, which can be used
for various applications. The most difficult aspect FIGURE 1 FIRE TRIANGLE

ANNEXURE
4.4 BIOENERGY TECHNOLOGIES FOR THERMAL APPLICATIONS – POTENTIAL BIOMASS TECHNOLOGY OPTIONS
manipulating biomass combustion for maximizing The combustion efficiency is mainly determined
thermodynamic efficiency and minimizing adverse by completion of combustion process and the heat
environmental impacts. Combustion is a process in losses from the furnace or combustion device.
which carbon and hydrogen in the fuel react with Flame temperature also plays an important role
oxygen to form carbon dioxide and water through in the overall efficiency of combustion device.
a series of free radical reactions, resulting in the Excess air has more influence on adiabatic flame
liberation of useful heat. General combustion temperature than moisture content. Theoretically,
mechanisms have been proposed, defining various highest temperature can be achieved with
stages of chain reactions like initiation, propagation, stoichiometric air supply (λ = 1), but in reality,
and termination. Generally, these mechanisms excess air is always supplied to ensure complete
include the following processes. combustion. The optimal values of lambda depend
# Heating and drying on furnace design, fuel type, and fuel feeding/firing
# Pyrolysis and reduction system used. The value of λ in well-designed
# Gas phase pre-combustions and combustion furnaces/combustion devices is in the range 1.6–
reactions 2.5, while in poorly designed furnaces, the value
# Char oxidation reactions of λ reaches as high as 4–5.
# Post-combustion reactions
BIOMASS STOVES
A general biomass combustion model is shown in Archaeological evidence indicates that mankind
Figure 2. This general model gives some insight has known the use of fire for 400 000 years now.
into combustion reaction that can be generalized In the early years, fire was used to keep the caves
as warm. The use of fire for cooking started 100 000
CxHy + ( x + 0.25y )O2 → xCO2 + (0.5y )H2O years ago, and in the earlier days, open fire was
used (mainly for cooking/roasting meat), with fuel
Direct combustion systems are generally used to arranged in pyramid shape. The benefits of fire in
produce heat, which can be either used directly preserving food, protecting against large animals
or transferred to working fluid, such as steam, for and rodents, and providing warmth outweighed
further use in process heating or in steam engine the drawbacks of improper control on fire and
or turbine for power production. The combustion smoky conditions. A major development in open
efficiency can be defined as follows. fire was the evolution of vessels of different shapes,
followed by the development of shielded three-
thermal energy available in the flue gas
ηcomb = stone stove for holding the pot firmly over the
chemical energy in the sup plied fuel
open fire. Subsequently, shielded fire was changed
to a U-shaped mud or mud/stone stove, with front
opening for feeding fuel and entry of combustion
air. Despite several
developmental work on wood
stoves, large population in
the developing world still
employs traditional three-
stone or U-shaped shielded
fire stove, and in many
cases, there is a retrogressive
movement from the use of
wood to the use of cow dung
cakes and agro-residues as
FIGURE 2 REPRESENTATIVE MODEL OF BIOMASS COMBUSTION MECHANISM fuel (FAO 1993).

ANNEXURE
BIOENERGY TECHNOLOGIES FOR THERMAL APPLICATIONS – POTENTIAL BIOMASS TECHNOLOGY OPTIONS 4.4
Classification of biomass stoves local biomass are the two important social factors
Stoves that burn biomass such as firewood and that need to be taken into account while designing
agro-residues are called biomass stoves. These are a stove. User needs include various cooking
used at both domestic as well as institutional levels operations such as boiling, frying, baking, grilling,
for cooking, heating, and space heating purposes. steaming, pressure cooking, and so on, which are
Stoves burning biomass can be classified in needed to be performed using a stove. Apart from
several different ways, based on their attributes, this, it is also important to know cooking time and
functions, material, fuel types, and so on (FAO process heat requirement, which would determine
1993). Stoves can be classified as follows. power range for the stove. Availability of the local
# Fuel type: woody biomass, powdery biomass, construction material, desired portability, seasonal
briquettes, cow dung, and so on. availability of local biomass, and so on also need
# Function: monofunction or multifunction to be considered while designing a stove for the
stoves target group under consideration.
# Construction material: metal, clay, ceramic,
Technical factors
brick, and so on.
A high-performance stove should be efficient
# Portability: portable (metallic, ceramic) or fixed
and low in emission. A fuel-efficient stove would
(mud, clay, brick)
reduce the drudgery of users in fuel collection,
# Number of pots: single, two pots, three pots,
while improvement in emissions would save users
and so on.
from harmful impacts due to smoke exposure.
However, as mentioned earlier, the general strategy
Stove designed for a particular fuel and for a
particular application can be
used with different fuels and
can have various applications
Amount Power
but might not perform with Food and type output
same efficiency. Needs Size of
Number of Number of combustion
Pans dishes and holes and chamber
Design criteria Time pan sizes hole sizes
(or more
Stove is a consumer-specific stoves)
device. Efforts on developing Fuel Wood Control

improved stoves are mainly Local Charcoal
resources Agriculture Grate
aimed at improving energy waste Dampers
efficiency (saving fuel) or
Material Metal
reducing emissions (improving Skills Clay
working conditions, reducing
Burn hazards Final Cost
adverse impact on health). to children design
Safety/ Fuel economy
While designing a stove, health Fire hazards
both engineering and Chimney
Smoke
non-engineering or social
parameters are required to be Portable
considered. Comfort Hot water

Cooking Height and
posture location of stove
Social factors
Interlinkage between various Social (customers) Engineering Development and
considerations considerations ecological considerations
criteria for stove design is shown
in Figure 3 (Verhaart 1983).
User need and availability of FIGURE 3 DESIGN CONSIDERATIONS FOR A STOVE

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adopted in designing improved stove is improving

Table 1
energy efficiency (by enhancing heat transfer)
QUALITATIVE EFFECTS OF VARIOUS FACTORS ON STOVE
and providing chimney for the removal of smoke.
DESIGN
Though this strategy improves the fuel efficiency
and also indoor air quality, the overall emission Factor Action needs to be taken to
reduction is questionable. Therefore, besides Maximize Minimize

improving the heat transfer efficiency, it is necessary efficiency emissions
to ensure improvement in combustion efficiency, Stove factors

whereby emission of unburned harmful pollutants Combustion chamber Maximize Minimize
can be minimized. Complete combustion can be volume
ensured by adopting the following steps. Temperature of combustion Minimize Maximize
# Maintaining higher temperatures in the chamber
combustion chamber. Excess air levels Optimize Optimize
# Providing sufficient air and ensuring proper Preheating of primary air Maximize Maximize
mixing for complete combustion. Thermal mass
# Ensuring sufficient residence time for the
For short cooking time Minimize Minimize
completion of combustion reactions.
For long cooking time Maximize Maximize
Process factors Operational factors
Composition of biomass in terms of C–H–O Fuel burning rate Minimize Maximize
content, ash, and moisture-free nature is quite Fuel charge size Minimize Minimize
similar (as mentioned earlier), but other parameters Ratio of charge size to burn Minimize Minimize
such as moisture content and volatile fraction have rate
profound effect on its combustion characteristics. Volume to surface ratio Maximize Maximize
Besides, there are a number of other process
Fuel factors
factors that need to be considered while designing
Moisture content Optimize @ 10% Optimize @2 5%
a stove for maximizing efficiency and minimizing
emissions. The effects of these process factors are Volatile matter content Minimize Minimize
not easily quantifiable. Table 1 summarizes their Ash content Minimize Minimize
qualitative effect.
The overall thermal efficiency (ηo) of a stove is monoxide (CO), total suspended particulates
defined as the ratio of the amount of useful heat (TSP), polycyclic aromatic hydrocarbons (PAH),
absorbed for cooking food to the amount of energy and formaldehyde. Several design and operating
content in the fuel used. It is a combination of parameters result in incomplete combustion, thus
partial efficiencies such as combustion efficiency contributing to these emissions. These parameters
ηc (fraction of energy content of a fuel converted include insufficient supply of combustion air, lower
into heat through its combustion), heat transfer temperatures in combustion zone, improper mixing
efficiency ηh (fraction of heat generated, which of air and fuel, and so on. Many a times, some design
is transferred to the pot), and pot efficiency ηp modifications to improve thermal performance or
(fraction of useful energy actually used for cooking efficiency, such as reducing gap between the pan
food out of total heat transferred to pot). and the stove mouth as well as between the pan
and the grate, may prove detrimental, resulting in
Emissions from biomass stoves increased emissions. Therefore, there is a need to
Useful heat abosrbed by food take into consideration the effect of any design
ηo = = ηc × ηh × ηp
Heat conetent of biomass fuel used modification on stove as a whole. Generally,
Among the numerous pollutants emitted from with increasing power levels, emissions from the
biomass stoves, the most significant ones are carbon stove are observed to increase. Similarly, higher

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emissions are observed with smaller stoves. Many reactions to produce volatile matter and provide
a times, this is due to the lower residence time of heat energy necessary for further endothermic
the fuel in the combustion chamber of the stove, reduction reactions to produce producer gas, which
resulting in incomplete combustion and, hence, mainly consists of a mixture of combustible gases
higher emissions. such as CO, hydrogen, traces of methane, and
other hydrocarbons. Normally, the air is used as
BIOMASS GASIFICATION a gasifying agent; however, the use of oxygen can
Thermochemical biomass gasification is a process produce rich, higher calorific value gas, but due to
in which solid biomass fuel is converted into cost implications, it is not usually preferred.
gaseous combustible form (called producer gas)
by means of partial oxidation. The reaction is Gasification reactions
carried out at elevated temperatures in a reactor A complete understanding of the various complex
called gasifier. Application of gasifiers assumed reactions occurring in a gasifier has not been
significant importance during World War II possible so far. However, the following reactions
due to the scarcity of petroleum products. By explain the process of gasification fairly well.
the end of the World War in 1942, more than C+O2 —> CO2+393 800 kJ/kg mole
million vehicles using gasifiers were in operation (combustion)
throughout the world. However, after the end of C+H2O —> CO+H2 – 131 400 kJ/kg mole
the War, they were largely decommissioned, as (water gas)
petroleum products once again became widely C+CO2 —> 2CO – 172 600 kJ/kg mole
available at cheap rates. The energy crisis in the (Boudouard reaction)
1970s generated renewed interest in gasification. CO+H2O —> CO2+H2+41 200 kJ/kg mole
The technology was perceived as a relatively (water shift reaction)
cheaper option in developing countries having C+2H2 —> CH4+75 000 kJ/kg mole
sufficient sustainable biomass for small-scale (methane reaction)
industrial as well as power generation applications.
Gasification of biomass looks simple in principle, With the help of the above reaction scheme, and
and many types of gasifiers have been developed. with the knowledge of the equilibrium constants, it
Production of gaseous fuel from solid fuel offers is possible to predict the equilibrium composition of
easy handling, better control on combustion, the gaseous products.The equilibrium composition
and possibility of using it in internal combustion of a given solid fuel depends on the air supply
engine for shaft power or electricity production, per unit weight of the biomass. A dimensionless
which makes gasification very appealing, especially parameter, known as the equivalence ratio (ER),
for small decentralized options. However, biomass is applied to characterize the air supply conditions,
fuel used in gasifier varies widely in its physical and is usually defined as follows.
and chemical properties, and makes the gasifier Weight of the actual oxygen supplied/Weight of
reactions complicated to design. the theoretical oxygen required
The denominator in the above equation is the
Principle of gasification oxygen required for the complete combustion
Biomass gasification is a process of converting of the fuel, and it varies from fuel to fuel. It is
solid biomass fuel into gaseous combustible gas generally observed that for effective gasification,
(called producer gas) through a sequence of the ER should be in the range of 0.2–0.4. Below
complex thermochemical reactions. In the first the ER value of 0.2, pyrolysis dominates the
stage, partial combustion of biomass to produce process and above the ER value of 0.4, combustion
gas and char occurs along with the generation predominates.
of heat. This heat is utilized in drying biomass In a real gasifier, however, the composition of
to evaporate its moisture as well as for pyrolysis the gas does not reach the equilibrium value and is

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generally dependent on the gasifier design. Factors of higher moisture content in the gas, more air is
affecting the gas composition are temperature required to combust biomass required to generate
distribution in the fuel bed, average gas residence heat for drying/heating of the biomass as well as
time, and the residence time distribution. These for achieving endothermic gasification reactions.
are, in turn, dependent on the mode of air entry, As a result, with higher moisture content in the
dimensions of the gasifier, and the quantum of biomass, the carbon dioxide fraction in the gas
heat loss to the surroundings. The modelling of increases and CO fraction reduces. It also becomes
the various processes occurring in the gasifier difficult to maintain high fuel bed temperature, as
requires not only the knowledge of kinetics but the biomass has very high moisture content. The
also an understanding of the heat and mass transfer percentage of hydrogen in the gas increases slightly
processes occurring in various zones of the gasifier. initially till the biomass has about 20% moisture
A brief description of some important factors that content, but then again it starts decreasing.
affect the quality of producer gas generation in
gasifier is given subsequently. Residence time
Often, the effect of residence time is overlooked
Fuel size while designing a gasifier. In order to generate
Fuel size affects fuel movement within biomass as good quality gas at various rates of fuel burning
well as the rate of reactions and energy intensity (or rates of producing gas), there is a need to
per unit volume. Large wood pieces provide smaller ensure sufficient time for the completion of
surface area per unit volume of reactor, which, in gasifier reactions within the reactor zone. This
turn, affects the quality of gas, as volatilization or helps in achieving tar cracking under reducing
pyrolysis becomes less intense. Very small-sized environment in the high temperature zone in the
biomass leads to intense volatilization process, presence of char, resulting in reduced components
leading to the formation of significant pyrolytic for tar cracking. Cleaning in this system may work
liquid, which is not desirable in gasification, though out to be a costly affair, especially for smaller
it might be desired otherwise for obtaining liquid systems.
fuel. Larger fuel size also leads to fuel bridging,
which hampers the smooth fuel movement within Ash content and its nature
gasifier reactor. Smaller fuel size results in higher Materials with high ash content are difficult to
pressure drop across the fuel bed in the reactor. handle, as they can lead to the problem of clinker
Therefore, normally, fuel of the size one-fourth or formation in the fuel bed, especially if ash has low
one-fifth of the smallest dimension of the reactor fusion point. Also, the presence of several inorganic
cross-section is preferred to avoid fuel bridging. matters such as mud, sand, and grit is not quite
If pulverized fuel is used in the fixed bed gasifier, unusual in agro-based biomass. This may not pose
the fuel movement becomes non-uniform and any problem in combustion devices/furnaces but
takes place in an uneven manner, and many a can block the entire reactor operation due to ash
times, tunnelled gas pathways are generated in the fusion taking place inside the reactor at higher
fuel bed, causing tar carryover without cracking, temperatures, which hampers the fuel movement
resulting in high tar content in raw gas. and gasification process.
Fuel moisture content Gasifier reactor types

With higher moisture content, the net calorific The various types of reactors used for biomass
value of fuel decreases and so does the calorific gasification can be classified in different ways,
value of the producer gas generated, thereby leading of which density factor (ratio of dense biomass
to a reduction in gasification efficiency. Also, the phase to total reactor volume) is a simple and
tar fraction in the producer gas increases with an effective way of classification. Thus, gasifiers can
increase in the moisture in the biomass. Because be classified as follows.

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# Dense phase reactors furnaces, as it gives higher operating thermal

# Lean phase reactors efficiencies. If the gas is to be used for electricity
generation by internal combustion (IC) engines, it
In dense phase reactors, such as fixed bed reactors has to be cleaned thoroughly.
(updraft, downdraft, cross draft, and so on), In most updraft gasifiers, steam is injected or
biomass or feedstock occupies maximum reactor evaporated into the hot partial combustion zone,
volume, with typical density factors of about which has a beneficial effect on the gas quality
0.3–0.8. On the contrary, in lean phase reactors, and also prevents the lower portion of the gasifier
such as fluidized bed reactors, biomass occupies from overheating. Generally, the sensible heat of
very little reactor volume, that is, of the order of the producer gas or the radiative heat from the
0.05–0.2. Dense phase reactors can be classified gasifier shell is used for generating the necessary
as follows. amount of steam.
The characteristics of an updraft gasifier are as
Updraft, or countercurrent gasifier follows.
In a countercurrent moving bed reactor, also called # It has clearly defined zones for various
as updraft gasifier, the air flows in countercurrent reactions.
to downward fuel flow and enters into the gasifier # Its efficiency is high because hot gases pass
from below the grate and flows in the upward through entire fuel bed and leave at lower
direction within the gasifier. The updraft gasifier temperatures. The sensible heat of the hot gas
has defined distinct zones for partial combustion, is used for reduction, pyrolysis, and drying
reduction, and distillation (Figure 4A). The gas processes.
produced in the reduction zone leaves the gasifier # Products from pyrolysis and drying, containing
reactor, along with the pyrolysis products and water vapour, tar, and volatiles, leave the gasifier
the steam from the drying zone. The resulting without passing through high temperature
combustible producer gas is rich in hydrocarbons zones and, therefore, do not get cracked. Hence,
(tars) and, therefore, has relatively higher calorific elaborate gas cleaning is required before using
value. Therefore, it is more suitable for thermal it, making it less suitable for engine operation.
applications such as direct heating in industrial # It is unsuitable for high volatile fuels.
Downdraft, or co-current gasifier

In a co-current moving bed reactor, or a downdraft
20 °C
gasifier, the air enters at the middle level of the
gasifier, above the grate, and the resulting mixture
Solid fuel to
be burned
of air and gas flows down cocurrently through the
80 °C
Drying gasifier reactor (Figure 4B). All the decomposition
100 °C
Pre-heating products from the pyrolysis and drying zones are
Gas 200 °C
Removal of volatile forced to pass through an oxidation zone. This
600 °C
matter leads to the thermal cracking of the volatiles,
800 °C Reduction layer resulting in reduced tar content in the producer
1000 °C
1100 °C Oxidization layer gas. For this reason, this gas is preferred for engine
1200 °C
applications. There is always a constriction at the
800 °C Ash sludge layer
200 °C level of the oxidation zone to force the pyrolysis
Fire Cooling layer
mouth
products through a concentrated high temperature
Air zone to achieve complete decomposition. This
Ash pocket concentrated oxidation zone can cause sintering or
slagging of ash, resulting in clinker formation and
FIGURE 4A UPDRAFT GASIFIER consequent blocking of the constricted area and/or

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# This gasifier is not suitable for high ash, high

moisture, and low ash fusion temperature
fuels.
Cross-draft gasifier
Drying zone
In a cross-draft gasifier, the air enters from one
side of the gasifier reactor, and gas leaves from the
other side (Figure 4C). A cross-draft gasifier has
Distillation zone very few applications and can hardly be credited
with any advantage besides a good permeability of
the bed. The characteristics of this type of gasifier
Hearth are given below.
Air zone Air
# Grate not required.
# Single air tuyere.
Reduction zone
Gas # Ash formed due to high temperature falls to the
Ash pit bottom and does not hinder operation.
# The high exit temperatures of the gas and high
FIGURE 4B DOWNDRAFT GASIFIER carbon dioxide emission result in poor quality

of the gas and low efficiency.
channel formation. Continuous rotating ash grates
Tables 2 and 3 give typical operational data and
or other mechanical shaking may be required
producer gas composition and quality for different
to avoid this problem. Compared to an updraft
gasifier reactors.
gasifier, the disadvantages of a downdraft gasifier
are higher gas outlet temperature and lower thermal
efficiency. Additional steam or water injection is
not common in downdraft gasifiers. They can be
operated at very high specific gasification rate – in
the range 2900–3900 kg/h m2 – which corresponds
to about 1 Nm3/h m2 (highest reported was 5020
Drying zone
kg/h m2). The initial ignition time required for a
downdraft gasifier is lower compared to an updraft
gasifier, which is in the range of 15–20 minutes, but Distillation
it is still perceived longer. A downdraft gasifier has zone Reduction
relatively better load following capability (ability zone
Air
to quickly extend the partial combustion zone to Gas
produce higher required gas quantity). Hearth
zone
The characteristics of a downdraft gasifier are
as follows.
# Before leaving, tar-laden gases pass through the
Ash pit
high temperature bed of coal in the oxidation
zone and, hence, get cracked. Thus, the output FIGURE 4C CROSS-DRAFT GASIFIER
gases are relatively clean, requiring less elaborate
gas cleaning system.
# The gases leave at a relatively high temperature, Producer gas cleaning and conditioning
about 400–500 °C; hence, the operating thermal As mentioned earlier, the quality of gas with
efficiency of this gasifier is less than that of an respect to impurities such as tar, dust, and water
updraft gasifier. vapour varies with different reactors, and even for

ANNEXURE
Table 2
TYPICAL OPERATIONAL DATA FOR DIFFERENT TYPES OF GASIFIERS
Downdraft Updraft Fluid bed
Conventional Circulating
2
Grate energy release, GJ/h.m 1.5–4 2.5–5 6–9 40
Off gas temperature, °C 600–800 75–150 650–850 800–900
Oils and tar, kg/kg dry feed 0.001–0.01 0.05–0.15 0.01–0.05 –
Char loss, kg/kg dry feed 0.02 0.01–0.02 0.02–0.05 –
Table 3
PRODUCER GAS CHARACTERISTICS FROM DIFFERENT GASIFIERS
Gasifier reactor type Gas composition, dry, vol % HHV (MJ/m3) Gas quality
H2 CO CO2 CH4 N2 Tars Dust
Fluid bed air-blown 9 14 20 7 50 5.4 Fair Poor
Updraft air-blown 11 24 9 3 53 5.5 Poor Good
Downdraft air-blown 17 21 13 1 48 5.7 Good Fair
Downdraft oxygen- 32 48 15 2 3 10.4 Good Good
blown
Multisolid fluid bed 15 47 15 23 0 16.1 Fair Poor
Twin fluidized bed 31 48 0 21 0 17.4 Fair Poor
gasification
HHV – high heating value
a particular reactor type, it varies with the fuel agricultural products, tar needs to be removed, as
used as well as operating conditions. Depending the seed layer acts like a granular bed filter and
on the application, the gas needs to be cleaned and tar gets deposited in the first layer. Similarly, in
conditioned. There is always a possibility of tar some cases, tar needs to be removed in pottery or
and vapour condensing along with dust particles ceramic industry application in order to prevent
to form a semi-solid mixture, which blocks various any adverse effect on the product quality.
filters and gasifier system components down the
line. In order to prevent this, the gas is cleaned and Producer gas utilization
conditioned. However, the best strategy would be to Depending on the gasifying agent, like air and
obtain a clean gas, which, in turn, would reduce gas oxygen/steam, gas with low (calorific value of 3–7
cleaning requirement. Normally, dust particulates MJ/Nm3) or medium (calorific value of 12–16
from the gas are removed in hot conditions (tar MJ/Nm3) heat value is produced. In most of the
and water vapour remaining in gaseous form), and gasifiers, air is used as a gasifying agent, and so,
then the gas is cooled to condense tar and water gas with low heating value is produced, which
vapour to form liquid condensate, which is then needs to be utilized at the site, as compressing
trapped and removed. The extent of treatment and transporting it become expensive due to high
required varies, depending on gas applications. (about 50%–55%) nitrogen content in gas.
Generally, no elaborate treatment is required The primary objective of gasification is to
for direct thermal applications of gas, as all the tar convert solid biomass into a more convenient-
gets burned if burner is designed properly. Thus, to-use gaseous form (two steps up on the energy
only dust particulates are removed. However, if ladder) called producer gas, which, in turn, can be
the gas is to be used directly for drying seeds or used in gas burners to use biomass more efficiently

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(reducing biomass consumption) or replace fossil producer gas is used instead of natural gas, and
fuel (gas/oil fired burners). Also, after extensive therefore, modifications in flue gas paths might
cleaning, the gas can be used for producing power become necessary for compensating higher head
by using IC engines. losses. Lower flame temperature attainable with
Various gas characteristics (physical and producer gas can have limitations in its use (and
chemical parameters), along with velocity, affect so at higher temperatures like metal melting of
the performance of the gas in a burner. These are cement kiln dual firing becomes necessary) and
listed as below. also result in lower heat transfer efficiencies,
# Gas density compared to air density resulting in derating of burner capacity.
# Heating value of gas
# Stoichiometric air requirement (for complete Gasifier stove
combustion) The heating of biomass causes chemical
# Flame speed coefficients of gas constituents decomposition (‘pyrolysis’), which releases volatile
solids or gases, which need to be subsequently
Variation in these parameters can result in flame burned in ‘secondary combustion’ process. This
lift-off (excessive gas velocity, resulting in its losing process occurs nearly simultaneously in regular
contact with the burner), internal burning of flame biomass combustion stoves/fires, making the two
back (lower gas velocity than flame propagation, stages difficult to observe or even control. But if
resulting in internal burning) or unstable flame. these pyrolysis gases are not burned immediately,
Flame back can be dangerous as flame starts they can escape as products of incomplete
moving upstream in a premixed gas–air mixture combustion (PIC). As mentioned earlier, the
and can be prevented by flame arrester but can PIC have more global warming potential (GWP)
result in the flame getting extinguished. While than carbon dioxide, which is obtained through
changing the type of gaseous fuel used in the complete combustion of fuel. The pyrolysis process
gas burner, there is a need to give attention to is easier to understand, observe, and control. This
calorific value (heating value), stoichiometric air process is informally known as ‘gasification’. As
requirements, and its effect on adiabatic flame mentioned earlier, commercially viable gasification
temperature as well gas flue gas volumes. Table 4 has long been understood and used in the industry
gives a comparison for the usage of low heating sector and even in transportation, but does not
value (LHV), medium heating value (MHV), and find application for small applications such as a
natural gas in the burner. household stove.
It can be observed that for the generation of 1 MJ Since 1985, Dr T B Reed worked for about
of energy, the producer (LHV) gas requirement is a decade on the development of a very small
8.5 times higher than the natural gas requirement. gasifier for meeting the domestic stove needs of
As a result, higher flue gases are generated when impoverished people. He worked on developing
Table 4
COMPARISON OF HEATING VALUE, STOICHIOMETRIC COMBUSTION VOLUMES, AND FLAME TEMPERATURE
Fuel Stoichiometric combustion volumes (Nm3/MJ) Heating value Adiabatic flame temperature
(MJ/Nm3) (°C) (with 10% excess air)
Air Fuel Fuel+air Flue gases
LHV 0.20 0.231 0.43 0.39 4.30 1480
MHV 0.20 0.104 0.30 0.27 10.0 1870
Natural gas 0.25 0.027 0.28 0.28 38.0 1860
LHV – low heating value; MHV – medium heating value

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an inverted downdraft (IDD) natural convection in 2001, a prototype forced air gasifier stove was
gasifier stove. Figure 5 shows the schematic operated on a kitchen table. Figure 6 shows the
diagram of a gasifier stove. He tested this stove for schematic diagram and photographs of gasifier
efficiency measurement, which was quite high, of turbo-stove.
the order of 30%–35%. Later, he worked on sizing A series of modifications and improvisation
the stove and trying to use it for making charcoal. resulted in the gasifier turbo-stove concept. These
There was no real success with applications. So, modifications include different stackable units
Dr Reed stopped his research work in 1995. in a heat column over a gasifier unit with an air
However, later in 1998, he began working on a pipe, smaller holes for the entrance of secondary
smaller, forced convection model with a fan, and air, pre-heated secondary air, a tapered chimney,
and independent structural components for the
stove body. The gasifier chamber is removable and,
Cooking pan
therefore, can be emptied to save the resultant
charcoal, re-loaded with biomass, re-lighted, and
re-inserted into the heat column. Later in 2002, a
Gas wick ‘wood gas camp stove’ was developed with forced
air designs with the intention of constructing a stove
for the affluent North American camper market. It
Insulation
had a battery-powered fan and could produce an
Secondary air impressive blue flame for sustained periods.
Pyrolysis gas BIOGAS TECHNOLOGY

Charcoal zone Microbial conversion of agricultural, industrial,
Flaming pyrolysis zone and domestic waste has been a common practice
for the past 50 years. The conversion leads to the
Unburned wood utilization of biomass waste as a valuable resource
and production of a fuel gas called biogas, which
Grate
can be used for cooking, lighting, and power
generation. Biogas systems have, in recent years,
Primary air control
become an attractive option for decentralized
FIGURE 5 NATURAL DRAFT GASIFIER STOVE OPERATING rural development, as they produce a cheap fuel
ON INVERSE DOWNDRAFT PRINCIPLE and good quality, rich manure. They also provide
an effective and convenient way for disposing of
FIGURE 6 GASIFIER TURBO-STOVE

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night soil and generate social benefits in terms involving a number of microbial populations
of reduction of drudgery, time, and effort for and is controlled by various environmental
fuelwood collection and cooking by women and factors like pH, temperature, ionic strength
young girls. They do not generate smoke, thus or salinity, nutrients, and toxic or inhibitory
eliminating the adverse effects of smoke on women substrates. Among all these, the most crucial
and children. parameter is temperature, as methanogenesis is
strongly temperature dependent, with reaction
Process rates generally increasing with the increase in
The process of anaerobic digestion is a three- temperature. The most optimum temperature
stage process. The stages proceed simultaneously range for gas production is 30–35 °C (mesophilic),
and include the activities of diverse group of below which the digestion process slows down,
microbes with specific metabolic requirements. In with little gas produced at a temperature of
the first stage of enzymatic hydrolysis, bacteria like 15 °C and less. Therefore, in areas that witness
Clostridium, Ruminoccus, and Cellumonas produce temperature fluctuation, such as mountainous
extracellular enzymes, such as cellulase, protease, regions, temperatures have to be maintained by
amylase, and lipase, which degrade organic providing heat or increasing insulation to prevent
materials like complex carbohydrates, lipids, and heat losses. The hydrogen ion concentration, or the
proteins present in the organic biomass into more pH, is another important factor, as most anaerobic
simple compounds such as sugars. During the conversion processes operate best at near neutral
second stage of acidification, fermentative acid- pH. Excess production and accumulation of acidic
producing bacteria, such as Anaerovibrio lipolytica, or basic conversion products such as organic
Bacteroides amylophilus, Bacteriodes ruminocola, fatty acids or ammonia lead to pH fluctuations
and so on, convert the simplified compounds into outside the optimal range, thereby displacing the
volatile fatty acids, hydrogen, and carbon dioxide. bicarbonate buffer system that has more neutral
In this process, the facultative anaerobic bacteria pH, thus inhibiting methanogenesis. Methane
utilize oxygen and carbon, thereby creating formation is also affected by the quantity of daily
anaerobic conditions necessary for methanogenesis. feeding (loading rate) and the retention period of
In the final stage, obligate anaerobes, which are the feedstock in a biogas plant. The loading rate
archaebacteria and mainly include Methanosarcina and retention period are optimized, depending on
barkeri, Methanococus mazei, and Methanothrix the nature of the feedstock and climatic conditions.
soengenii, decompose low molecular weight A high loading rate that is more than the rated
compounds (acetic acid, hydrogen, carbon capacity will form excessive acids, leading to low
dioxide) to form biogas, sometimes also referred rate of gas formation and production of undigested
to as ‘gobar’ gas. This gas consists of methane slurry. The retention period for most plants ranges
and carbon dioxide, along with some traces of between 30 days and 55 days, and is found to
other gases, notably hydrogen sulphide. The exact reduce if temperatures are raised or more nutrients
composition will vary according to the substrate are added to the digester. The optimum nutrient
used in the methanogenesis process, but as an requirement is generally 20–30 C/N ratio. The
approximate guide, when cattle dung is a major presence of trace elements like iron, magnesium,
constituent of fermentation, the composition of calcium, sodium, barium, tungsten, and nickel
the resulting gas will be 55%–66% methane, 40%– activates the enzyme systems of acetogenic and
45% carbon dioxide, and a negligible amount of methanogenic bacteria and results in higher gas
hydrogen sulphide and hydrogen. production, while heavy metals like mercury, lead,
chromium, and sulphites, if present, are toxic to
Factors affecting methanogenesis the anaerobic process.
The anaerobic microbial conversion of organic
substrates to methane is a complex biogenic process

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Design of biogas plant

Mixing
Biogas plants are classified on the basis of loading tank
cycle, gas storage system, digester position and size, Outlet
and feed material.The process can be a continuous, tank
semi-continuous or batch type. In the batch type, Gas
storage
the loading of digester is done periodically, and
after a fall in the gas production, the digester is
unloaded and recharged. This is suitable for crop
and forest waste, agro-industrial waste, and other
waste that does not mix homogeneously with
water. In a semi-continuous digester, feeding is
done once in three to four days, and the digester Digester
is suitable for cattle dung, crop residues, forest

waste, and so on. Continuous digesters are more
suitable for regularly and sufficiently available
waste that can be mixed homogeneously, such as
cattle dung and night soil.
A typical biogas plant consists of a digester FIGURE 7 KVIC FLOATING DOME BIOGAS PLANT
in which the slurry (dung mixed with water) is
fermented; an inlet tank, which is used to mix the approach for promoting medium-sized biogas
feed and from where it is passed into the digester; plants for small communities (six to eight families)
a gas holder/dome in which the generated gas is being adopted.
is collected; an outlet tank to remove the spent Salient features of the KVIC model with respect
slurry; distribution pipeline(s) to take the gas to to its features and cost economics are as follows.
the kitchen; and a manure pit in which the spent # Feedstock: cattle dung, night soil, kitchen waste,
slurry is stored. Based on the gas storage system, leafy biomass, vegetable market waste
there are two main digester designs: the floating # Single chamber digester with floating drum for
dome and the fixed dome. In the floating dome gas storage
biogas plant, also known as the KVIC model, the # Retention time of 35–40 days
biogas is stored in a drum that can be made of # Cost economics
steel, ferro-cement or fibre glass. Based on the $ Cost of plant (1 m3/day): Rs 4500
quantity of the gas stored in it, the drum moves $ Feedstock: 25 kg/day
up and down on a guide frame, which is fixed in $ Payback period: 1–2 years
digester walls. In the fixed dome type, the digester $ liquefied petroleum gas (LPG) saved:
and gas storage dome are integrated with the space Rs 3982/annum
for storing usable gas between the dome and the $ Kerosene saved: Rs 2105 /annum
digester, and the most common design is the $ Wood saved: Rs 1894 /annum
Deenbandhu model. $ Manure production: 4500 kg/annum
While the Deenbandhu model is appropriate
and more suitable for individual family-type Designs for alternative feedstock
requirements, the large-sized floating dome KVIC In rural areas, it is a common practice to use
design biogas plants have been successfully adopted cattle dung and night soil as feedstocks in biogas
for cattle dung, night soil, kitchen and domestic plants that meet the cooking energy requirements.
waste, vegetable market waste, and so on (Figure However, the availability of cattle dung in rural
7). While the ministry continues to promote areas is limited, and the cattle population is also
individual cattle dung based family-type biogas diminishing fast. Hence, there is a need to use
plants under its National Biogas Programme, an alternative feedstocks for meeting the increasing

ANNEXURE
cooking energy needs. Alternative organic feed $ LPG saved: Rs 3982/annum

substrates like agriculture residues, oil cakes, $ Kerosene saved: Rs 2105/annum
dry and wet leaves, vegetable market waste, and $ Wood saved: Rs 1894/annum
kitchen waste, which are abundantly available $ Manure production: 1500 kg/annum
in villages, also have the potential, which can be
tapped through appropriate technology for energy The acid reactor is daily fed with waste in serial
generation, thus, meeting the increasing cooking order and submerged in water for microbial
energy demand. So, the production of biogas from action. The water is re-sprinkled thrice a day for
other biomass like leafy waste, agro-residues, and 15 minutes over the waste bed. Percolate rich in
kitchen waste garbage is an attractive option, which volatile fatty acid is collected from the bottom of
will facilitate extending the benefits of biogas the reactor after six days and is fed to the methane
technology to a larger section of the society. It is reactor. The effluent discharged from the methane
estimated that the total potential of leafy biomass reactor is recycled to the acid reactor for drawing
production in India is of the order of 1130 million more acid-rich liquor from the waste. A biphasic
tonnes (MT) (dry). If even 10% of this biomass plant based on the similar principle is operational
could be mobilized for biomass production, about at Maharashtra Scooters for treating 300 kg/
67% of the rural families could be provided with day of canteen waste generated in their campus
biogas for cooking. After years of R&D efforts, canteen.
different designs have been developed in order to
harness the biogas potential of such substrates. APPLICATION OF SCIENCE AND TECHNOLOGY TO
RURAL AREAS PLUG FLOW DIGESTER
TERI’S ENHANCED ACIDIFICATION AND The Application of Science and Technology to
METHANATION PROCESS Rural Areas, or ASTRA, design developed at
TERI’s Enhanced Acidification and Methanation, IISc, Bangalore, is based on the fermentation and
or TEAM, reactor is a biphasic design, which floating properties of the biomass feedstock (Figure
is operational since the past four years at Gual 9). Main features of this design are as follows.
Pahari, Haryana (Figure 8). Main features of this # Feedstocks: mixed green leaf biomass, grasses,
design reactor are as follows. twigs
# Feedstocks: different agro-residues, vegetable # Single chamber brick masonry structure for the
market waste, and kitchen waste digester walls and cylindrical brick masonry
# Six acidification modules vault cover
# One methanation reactor # Retention time of 35 days
# Retention time of seven days
# Minimal water requirement and operational
problems like scum formation
# Cost economics
$ Cost of plant (1 m3/day): Rs 20 000
$ Feedstock: 50 kg/day organic waste
$ Payback period: 2–5 years
FIGURE 9 TERI’S ENHANCED ACIDIFICATION AND

FIGURE 8 A TEAM REACTOR METHANATION PROCESS

ANNEXURE
# Gas collected in balloons # A mixer/pulper for crushing the solid waste

# Minimal water requirement # Premix tanks (three in number), pre-digestion
# Operational problems like scum formation tank, air compressor, and solar heater for heating
# Cost economics water
$ Cost of plant (1 m3/day): Rs 7500 # Gas delivery system
$ Feedstock: 17 kg/day # Main digestion tank
$ Payback period: two to four years # Tank for recycling of water and water pump
$ LPG saved: Rs 3982/annum # Gas utilization system
$ Kerosene saved: Rs 2105 /annum # Retention time of 12 days
$ Wood saved: Rs 1894/annum # Cost economics
$ Manure production: 3000 kg/annum $ Cost of plant (1 m3/day): Rs 3500
$ Feedstock: 25 kg/day organic waste
In plug flow digesters, freshly fed biomass $ Payback period: 1–2 years
feedstock in the slurry form undergoes about three $ LPG saved: Rs 3982/annum
to five days of rapid decomposition while being $ Kerosene saved: Rs 2105/annum
submerged under the digester liquid. This removes $ Wood saved: Rs 1894/annum
the problematic volatile fatty acid producing $ Manure production: 4500 kg/annum
constituents. After this phase, methanogens
adequately colonize the partially decomposed The conventional biogas KVIC design has been
biomass. The biomass acquires buoyancy at modified in two ways. First, by introducing a 5-
this stage and floats above the fermenter liquid. HP mixer to process the waste before putting it
The rate of acidogenesis and methanogenesis is into a pre-digester tank, and second, by using
adequately balanced, which produces biogas. Two thermophilic microbes for faster digestion of the
plants of capacities 60 × 4 m3 and 60 × 6 m3 are waste. The growth of thermophiles in the pre-
operational near Kannati, Chikkamangalur, for digester tank is ensured by mixing the waste with
treating coffee waste water. These are being run hot water and maintaining the temperature in the
for eight months with leafy biomass and for the range of 55–60 °C by using solar heater. From
balance three months as biomass-supported fixed the predigester tank, the slurry enters the main
film biogas plant for treating coffee waste water. tank, where it undergoes anaerobic digestion. The
undigested ligno-cellulosic and hemi-cellulosic
BHABHA ATOMIC RESEARCH CENTRE material then enters the settling tank. Manure is
The Bhabha Atomic Research Centre developed dug out from the settling tanks about a month
a biphasic system that uses the potential of later. The gas generated in the plant is used for
thermophiles for enhanced recovery of biogas by cooking in the nearby canteen/hostel and also for
using conventional biogas KVIC model. Main gas-based lights fitted around the plant.
features of the plant are as follows.
# Feedstocks: kitchen waste, vegetable waste, and
leafy biomass

ANNEXURE
ANNEXURE 4.5 SMALL WIND SYS TEMS 4.5
Small wind systems
W
hile large grid-connected wind sectors of the economy. However, the production
farms are now common in many and use of fossil fuels for power generation,
countries, small wind machines are industrial application, and transportation have
also developing their own niche in been associated with adverse local environmental
the renewable energy sector. impacts such as deforestation, land degradation,
Typically, small wind machines of capacity up and water and air pollution. In addition, there are
to 100 kW are called small wind machines. Small concerns about the release of greenhouse (GHG)
wind energy systems are of the following types. emission from the energy sector, particularly
# Mechanical pumping systems during power generation using fossil fuels. One
# Battery charging aero-generators of capacities strategy to address these environmental issues
less than 100 kW and diversifying sources of energy supply at the
# Grid-connected wind farms using small same time is the development and promotion of
machines (Figure 1 illustrates small wind mills renewable energy technologies.
installed in Thailand) During the past two decades, considerable
efforts have been made towards large-scale
SMALL WIND MACHINES penetration of renewable energy technologies in
Energy is the prime mover of economic growth India. Grid-connected power generation through
and human development, which encompass all wind energy in the country has
crossed the 9521 MW mark, making
India the fourth largest wind power
generating country in the world
after Germany, Spain, and USA. At
the end of 2006, worldwide capacity
of wind-powered generators was
73.9 gigawatts, although it currently
produces just over 1% of worldwide
electricity use.
Wind energy
All renewable energy (except tidal
and geothermal power), including
the energy in fossil fuels, ultimately
FIGURE 1 WIND FARM USING SMALL WIND MACHINES comes from the sun. The sun
radiates 174 423 000 000 000 kWh
Source Unitron, India

ANNEXURE
4.5 SMALL WIND SYS TEMS
of energy to the earth per hour. In other words, the

earth receives 1.74 × 1017 watts of power. About
1%–2% of the energy coming from the sun is
converted into wind energy, which is about 50 to
100 times more than the energy converted into
biomass by all plants on earth.
Wind is a form of solar energy and is created
by the unequal heating of the earth’s surface by
the sun. During the day, the air above the land
heats up more quickly than the air over water.
The warm air over land expands and rises, and
the heavier, cooler air rushes in to take its place,
creating winds. At night, the winds are reversed FIGURE 2 GENERATION OF WIND ENERGY AND ITS
because the air cools more rapidly over land than DISTRIBUTION
over water. In the same way, the large atmospheric
winds that circle the earth are created because the vertical axis type such as the egg-beater-style
land near the earth’s equator is heated more by the Darrieus model, named after its French inventor.
sun compared to the land near the North Pole and Most large modern wind turbines are horizontal
South Pole. axis turbines.
The terms ‘wind energy’ and ‘wind power’
describe the process by which the wind is used Horizontal axis
to generate mechanical power, or electricity. Wind Most wind machines that are in operation today
turbines convert the kinetic energy in the wind are the horizontal axis type. Horizontal axis wind
into clean electricity. Wind power uses the kinetic machines have blades that resemble airplane
energy of the flowing air to generate mechanical propellers. A typical horizontal wind machine
energy in a wind turbine, which can be transformed stands as tall as a 20-storied building and has three
into pollution-free electricity. blades that span across 200 feet.
Air moves around the earth because of the
existing differences in temperature and atmospheric Vertical axis
pressure. Wind turbines harness the movement Vertical axis wind machines have blades that span
of the air to produce energy. The wind turns the from the top to the bottom, and the most common
blades, which turn a rotor shaft. This produces type (Darrieus wind turbine) looks like a giant
mechanical power, which is used to drive an two-blade egg beater. This type of vertical wind
electric generator. When the wind spins the blades machine is typically 100 feet tall and 50 feet wide.
of the wind turbine, a rotor captures the kinetic These machines are available in the capacity size
energy of the wind and converts it into rotary of 650 watts to 2 MW for onshore application. For
motion to drive the generator. Most turbines have offshore application, 5-MW capacity wind turbine
automatic overspeed-governing systems to keep is commercially available.
the rotor from spinning out of control in very high Horizontal and vertical axis wind turbines are
winds. Flow chart given in Figure 2 shows the presented in Figure 3, and the internal structure
steps of generation of energy from wind and its of a horizontal axis turbine is given in Figure 4.
distribution. Almost all wind turbine generators consist of
rotor blades, which rotate around a horizontal
Wind turbine types hub. The hub is connected to a gearbox and a
Modern wind turbines fall into two basic groups: generator, which are located inside a nacelle.
the horizontal axis type such as the traditional The nacelle houses electrical components and is
farm windmills used for pumping water and the mounted at the top of a tower.

ANNEXURE
SMALL WIND SYS TEMS 4.5
Rotor P = ½(k* Cp*ρ*A*V3)

Rotor diameter where, P = power output, kilowatts
blade
Cp = maximum power coefficient, ranging
Gearbox Generator
Rotor from 0.25 to 0.45, dimensionless (theoretical
Nacelle
diameter
Rotor
maximum = 0.59)
Fixed height ρ = air density, lb/ft3
pitch A = rotor swept area, ft2 or (π D2 )/4 (D is the
Rotor
rotor diameter in feet, π = 3.1416)
Tower blade
Gearbox
V = wind speed, mph
Generator
k = 0.000133, a constant to yield power in
Horizontal axis Vertical axis kilowatt (multiplying the above kilowatt by 1.340
converts it to horsepower [that is, 1 kW = 1.340
FIGURE 3 HORIZONTAL AND VERTICAL AXIS WIND
horsepower]).
TURBINES
To get a preliminary estimate of the performance
Pitch
of a particular wind turbine, the following formula
Low-speed is used.
shaft AEO = 0.01328 *D2* V3
Rotor Gear box where, AEO = annual energy output, kWh/year
Generator D = rotor diameter, feet
Anemometer
Wind V = annual average wind speed, mph
direction Controller
Brake Basic parts of small wind electric system
Small wind energy systems for home lighting
Yaw generally comprise a rotor, a generator or an
drive
Wind alternator mounted on a frame, a tail, a tower,
High-speed Nacelle
vane wiring, and the balance of system components,
Yaw motor
shaft controllers, inverters, and/or batteries (Figure 5).
Blades Tower Through the spinning blades, the rotor captures
the kinetic energy of the wind and converts it into
FIGURE 4 INTERNAL STRUCTURE OF HORIZONTAL AXIS rotary motion to drive the generator.
WIND TURBINE
Turbine components
Horizontal turbine components include the
following. Rotor
# A blade or a rotor, which converts the energy in Generator/
the wind to rotational shaft energy.
Tail
alternator
# A drive train, usually including a gearbox and
a generator.
# A tower that supports the rotor and drive
train.
# Other equipment, including controls, electrical Tower
cables, ground support equipment, and
interconnection equipment.
The formula for calculating power from a wind

FIGURE 5 BASIC PART OF SMALL WIND TURBINE
turbine is

ANNEXURE
Wind turbine will depend on the application. The balance of

A wind turbine generator converts mechanical system required will also depend on whether the
energy into electrical energy (Figure 6). Most system is grid-connected, stand-alone or part of
turbines manufactured today are horizontal axis a hybrid system. For a residential grid-connected
upwind machines with two or three blades, which application, the balance of system parts may
are mostly tubular and made of steel. The blades include a controller, storage batteries, a power-
are made of fibre-glass-reinforced polyester or conditioning unit (inverter), and wiring.
wood-epoxy.
Stand-alone systems
Stand-alone systems (systems not connected to
the utility grid) require batteries to store excess
power generated for use when the wind is calm.
They also need a charge controller to keep the
batteries from overcharging. Small wind turbines
generate DC (direct current) electricity. In very
small systems, DC appliances operate directly off
the batteries.
Grid-connected systems
In grid-connected systems, the only additional
equipment required is a power-conditioning
unit (inverter), which makes the turbine output
From grid electrically compatible with the utility grid. Figure
Inverter 7 depicts the arrangement showing wind turbine
connected with grid
Following components form a part of small
Batteries wind turbine systems.
# Control and protection systems
Batteries # Towers
To house $ Tilt-up towers usually for systems with
capacity under 1000 watts (1 kW)
FIGURE 6 SMALL WIND TURBINE FOR HOME LIGHTING
Tower
Wind speed increases with height; therefore, AC to grid
the turbine is mounted on a tower. In general, Wind
the higher the tower, the more power the wind turbine
system can produce. The tower also raises the
turbine above the air turbulence and obstructions AC utility
meter
such as hills, buildings, and trees. A general rule
of thumb is to install the wind turbine on a tower AC
with the bottom of the rotor blades at least 30 feet electrical
circuits
(9 metres) above any obstacle that is within 300
DC voltage AC voltage
feet (90 metres) of the tower. input input Main utility
Inverter and breaker panel
Balance of system interconnects
The parts that are needed in addition to the
FIGURE 7 WIND TURBINE CONNECTED TO GRID
turbine and the tower, or the other system parts,

ANNEXURE
$ Guyed towers usually used for systems with Generation of electricity from wind at a given
capacity between 1 kW and 50 kW wind speed and wind turbine type varies to a great
$ Self-supporting towers usually for turbines degree with the wind speed distribution around
with capacity above 50 kW the mean value. For example, on a site where 50%
# Battery of the time wind speed Vav = 12 m/s and 50% of the
# Inverter time Vav = 0 m/s, a wind turbine would generate
# Rectifier much more electricity than that which is on a site
# Monitoring system where 100% of the time wind speed Vav = 6 m/s.
This is due to the fact that wind energy, in theory,
Wind speed to operate a turbine is proportional to the cube of the wind speed.
The greater the annual mean wind speed, the better Wind resource evaluation is a critical element in
a turbine works. In general, most small/micro wind projecting turbine performance at a given site. The
turbines start generating electricity when wind energy available in a wind stream is proportional
speeds are in the range of approximately 3–4 m/ to the cube of its speed, which means that
s, and most products achieve their maximum, or doubling the wind speed increases the available
rated, output at a wind speed of 10–12 m/s, which energy by a factor of eight. Furthermore, the wind
is crucial when comparing products. In order to resource itself is seldom a steady, consistent flow.
measure the annual wind speed, the knowledge It varies with the time of day, season, height above
of prevailing wind and its direction are required ground, and type of terrain. Proper siting in windy
at the site. locations, away from large obstructions, enhances
In addition to geologic formations, other a wind turbine’s performance.
obstacles such as trees, buildings, and hills should In general, annual average wind speed of 5
also be considered. The turbine needs to be sited m/s (11 miles per hour, or mph) is required for
upwind of buildings and trees, and it needs to be grid-connected applications. Annual average wind
30 feet above anything to reach the height of 300 speed of 3–4 m/s (7–9 mph) may be adequate for
feet. unconnected electrical and mechanical applications
Any site will have different average wind speeds such as battery charging and water pumping. Wind
at different locations. An assessment of the site resources exceeding this speed prevail in many
should include taking into consideration elevated parts of the world.
structures like hills in the vicinity of the turbine. Wind power density is a useful way to evaluate
Such sites with elevations are more suitable than the wind resource available at a potential site. The
gullies or the lee side of hills. wind power density, measured in watts per square
A site where annual mean wind speed is 5 m/s, metre, indicates how much energy is available at
a turbine with a rating of 1 kW and a diameter of the site for conversion by a wind turbine. Wind
2.3 m would generate approximately 1200 kWh, speed generally increases with height above
or units, of electricity per year. For an average ground. Table 1 gives the classes of wind power
household to meet all its electricity needs from a density at 10 m and 50 m elevation.
small wind turbine, a system of 2.5–6 kW would Another useful indirect measurement of the
be needed, depending on wind speed. wind resource includes observing an area’s
vegetation. Trees, especially conifers or evergreens,
Wind resource assessment can be permanently deformed by strong winds.
Wind resources vary with the time of day, season, This deformity, known as ‘flagging’, has been
elevation, and type of terrain. Wind plays an used to estimate the average wind speed for an
important role in determining success or failure area. Figure 8 shows different level of flagging,
of a small wind turbine project. At the same time, depending on different wind speed levels.
the cost of assessing wind resources for a smaller
project can be too high.

ANNEXURE
Table 1
CLASSES OF WIND POWER DENSITY AT 10 M AND 50 M ELEVATION
10 m (33 feet) 50 m (164 feet)
2
Wind power class Wind power density (W/m ) Speed m/s (mph) Wind power density (W/m2) Speed m/s (mph)
I <100 <4.4 (9.8) <200 <5.6 (12.5)
II 100–150 4.4 (9.8)/5.1 (11.5) 200–300 5.6 (12.5)/6.4 (14.3)
III 150–200 5.1 (11.5)/5.6 (12.5) 300–400 6.4 (14.3)/7.0 (15.7)
IV 200–250 5.6 (12.5)/6.0 (13.4) 400–500 7.0 (15.7)/7.5 (16.8)
V 250–300 6.0 (13.4)/6.4 (14.3) 500–600 7.5 (16.8)/8.0 (17.9)
VI 300–400 6.4 (14.3)/7.0 (15.7) 600–800 8.0 (17.9)/8.8 (19.7)
VII >400 >7.0 (15.7) >800 >8.8 (19.7)
FIGURE 8 LEVELS OF FLAGGING CAUSED BY THE PREVAILING WIND DIRECTION
Windmill pumps the energy from the rotor to the pump rod, which
A windmill pump consists of a wind rotor, a pump, in turn transmits power to the pump. The useful
and a power transmission mechanism connecting life of a well-designed windmill pump is expected
the rotor to the pump. The rotor extracts energy to be 15 years or more with proper maintenance
from the wind and converts it into useful mechanical and care. The useful life of a windmill pump may
shaft power. A transmission mechanism conveys get reduced due to corrosion, which predominantly

ANNEXURE
affects the structure and the parts of the pump. and cut-out wind speeds for various types of small
Characteristics such as rotor diameter and cut-in wind turbines are given in Table 2.
Table 2
CHARACTERISTICS OF VARIOUS SMALL WIND TURBINES
Wind speed (m/s)
Windmill design/type Manufacturer Rotor No. of Solid area Cut-in Rated Output Capital
diameter (m) blades (m2) cost (E)
GM-II (geared) Rural Engineering School, 3 18 4.55 2.2 3.3 13.9 1256
Bhavanagar
SICO (General) The Scientific Instrument 3 18 5.37 2.2 5.0 23.9 1922
Company Limited, Allahabad
AV-45 (direct) Auroville Centre for Scientific 4.5 18 7.63 1.8 2.8 10.0 1669
Research (Aureka), Tamil
Nadu
AV-55 (direct) Auroville Centre for Scientific 5.7 24 10.70 1.5 3.0 10.0 2220
Research (Aureka), Tamil
Nadu
APOLY-12-PU500 (direct) Institute of Engineering and 5.0 12 6.19 2.5 5.0 10.0 763
rural Technology, Allahabad

ANNEXURE
A N N E X UBIOENERGY
R E 4TECHNOLOGIES
.6 FOR THERMAL APPLICATIONS – POTENTIAL BIOMASS TECHNOLOGY OPTIONS 4.4
Geothermal energy
G
eothermal energy is the natural heat are connected to the underground hot water
of the earth. The earth’s interior heat reservoir in the rocks. These are known as hot
is a result of high temperature dust dry rock (HDR) systems. Another method, which
and gas that can be traced to over is under investigation, is the exploitation of the
4 billion years ago and is continually regenerated large quantities of heat stored locally at accessible
from the decay of radioactive elements that occur depth in molten rock (magma). This can provide
in all rocks. high temperature underground water, which
From the surface down through the crust, the can provide energy for many applications. These
normal temperature gradient (the increase of applications include district heating, individual
temperature with the increase of depth) in the residential heating, and spa uses.
earth’s crust is 17–30 °C per kilometre of depth. Following are the commonly used technology
Below the crust is the mantle, which is made up # High temperature: >220 °C
of highly viscous, partially molten rocks that have $ Water or steam power generation; direct use
temperature in the range of 650–1250 °C. At the flash steam; combined (flash and binary)
earth’s core, which consists of a liquid outer core cycle; direct fluid use heat exchangers; heat
and a solid inner core, temperatures may reach pumps
4000–7000 °C. # Intermediate temperature: 100–220 °C
$ Water power generation direct use;
GEOTHERMAL ENERGY UTILIZATION binary cycle; direct fluid use; heat exchangers;
Currently, geothermal energy is exploited from heat pumps
the underground water stored in permeable rocks. # Low temperature: 50–150 °C
This is also called as hydro-thermal system. In this $ Water direct use; direct fluid use; heat
process, the water is heated by hot rocks. The heat exchangers; heat production
can also be extracted using geothermal heat pumps
that extract heat directly from the ground. Heat available between 100 °C and 150 °C can
In another process, hot rocks are artificially be used to generate electricity with special type of
fractured, and water is circulated between two plants. Heat above 150 °C is used for generating
wells – injection and producer wells – which electricity.

ANNEXURE
ANNEXURE 5.1 ENERGY CONSERVATION TECHNIQUES IN THE BUILDINGS 5.1
Energy conservation techniques in

the buildings
ECO-HOUSING AND ECO-FRIENDLY BUILDING new building. During the construction stage, there
DESIGN is efficient management of waste water and solid
Eco-house is a house that has minimal environmental waste. Efficient waste management plan ensures
impact during its construction and operation that the entire site is protected from hazardous
period. During its construction, it causes minimum construction waste.
disruption to surroundings. After its construction ENVIRONMENT-FRIENDLY AND ENERGY-
when it becomes habitable, it consumes very less EFFICIENT BUILDING DESIGN
electricity. It is naturally lit and ventilated. Energy-
All buildings in eco-housing are designed for
efficient architecture of eco-house ensures the
energy efficiency. There is an efficient utilization of
reduced consumption of electricity for cooling and
natural climatic conditions by using passive solar
heating.The plumbing system of eco-house uses less
design concepts. These design concepts include
water and puts relatively fewer loads on city’s sewage
the following.
system. This is designed giving due consideration
# Orientation and shading Buildings are oriented
to solid waste management system, reducing
in such a way that there is efficient use of sunlight
the burden on city’s solid waste disposal system.
and wind. Interiors of the properly orientated
Broadly, an eco-house follows six basic principles:
buildings are naturally heated in winters and
site planning, energy-efficient architecture, energy-
cooled in summers.
efficient systems in the building, use of renewable
# Building layout The building layout is designed
energy, efficient water management, and solid waste
in such a way that the rooms have naturally
management system.
comfortable environs during their occupancy
EFFICIENT SITE PLANNING period. For example, if the living room in an
Overall site planning and design of an eco- eco-house is planned to be used extensively
building integrates all natural principles. These during afternoons in summers, then its location
give due consideration to preservation and will be planned in such a way that it receives
conservation of natural features or resources sufficient natural and diffused light so that the
present on the site. These resources may include environment remains cool.
trees and vegetation, soil, water, and other natural # Window design Efficient window design
characteristics of the site. The building layout is enhances lighting and ventilation in the building.
drawn without disturbing trees and vegetation. Windows in an eco-house are sized and placed
Care is taken to ensure that trees are not disturbed according to solar path. During summers,
by construction activities. The fertile eco-housing only diffused light comes from the window,
site is preserved before starting the construction and during winters, warm sunlight filters
process and is utilized again for landscaping of the through these windows and makes interiors

ANNEXURE
5.1 ENERGY CONSERVATION TECHNIQUES IN THE BUILDINGS
more cosy. The windows of an eco-house are consumption, and there is efficient utilization of
high-performance windows; these are shaded water for various applications in buildings. Emphasis
well in order to protect the interiors from is laid on two aspects, that is, water conservation
the sun in harsh summers and from rains in and water efficiency. Water conservation means
monsoons. If the buildings are air-conditioned the preservation and efficient management of
then the window frames of high performance water. This includes use of fixtures that lead to
windows reduce heat losses and bring down the conservation of water. Water efficiency includes
loads on air-conditioners. prevention of wastage, overuse, and exploitation
# Energy- and resource-efficient technologies in building of the available resource.
construction An eco-house is constructed with
efficient building technologies, which use eco- EFFICIENT WASTE MANAGEMENT IN THE
friendly materials, and less water and power BUILDING
during construction. Eco-housing emphasizes on solid waste
# Low-energy building materials An eco-house management in the building. Solid waste generated
is constructed with low energy materials. from households generally reaches the city
Manufacture and transport of building materials dumping sites. There is no resource recovery in
are very resource and energy intensive. Low most of the cases. In general, the household waste
energy materials comprise materials that are generated constitutes various materials such as
locally available and require less energy and plastics, paper, and glass that can be recycled and
resources during the construction process. The reused. In addition, the waste has a high organic
materials that are made from waste or are the content, which can be used to recover useful
by-products of some other industry are also resources such as energy and manure. Solid waste
considered as low energy building materials. management in a building would also ensure safe
and environment-friendly disposal of waste.
USE OF RENEWABLE ENERGY IN THE BUILDING Bhutan has developed its own traditional
All buildings in eco-housing are fully or partly housing and building design guidelines, which
powered by renewable sources of energy. Examples are being followed strictly. Traditionally, locally
are using solar energy for water heating and space made mud bricks and conventional housing
heating, biogas for cooking, and other renewable construction techniques using bamboo and
energies wherever applicable. mud are still used in rural areas. However, the
use of cement and concrete for construction in
USE OF EFFICIENT SYSTEMS IN THE BUILDING urban areas and the use of GI sheets for roofing
The lighting, cooling, heating, and air-conditioning material are prevalent. In the context of Bhutan,
systems are efficiently designed in the eco- following recommendations to develop and adopt
housing. High performance, energy-efficient, and eco-friendly and energy-efficient housing codes
energy-labelled products are commonly used in and concepts can be considered
buildings. These appliances are based on the use of # National-level awareness programmes and
energy-efficient technologies and appliances, and capacity-building programmes for common
automatic control systems. Use of such equipment citizens and architects need to be developed.
reduces energy consumption in the building. For # Agencies like the Standards and Quality Control
example, heat pumps are used for space heating Authority (SQCA), National Housing Board,
and cooling, insulation is used in walls and roofs Association of Construction Contractors,
for reducing heat loss, and so on. National environment Commission, Ministry
of Works and Human Settlement, Urban
EFFICIENT WATER MANAGEMENT IN THE
Development Department, and so on can work
BUILDING
together.
Eco-housing emphasizes on water conservation.
There is significant reduction in water loss and

ANNEXURE
ENERGY CONSERVATION TECHNIQUES IN THE BUILDINGS 5.1
# The SQCA, which is already working with about energy conservation and energy efficiency
the construction industry, can be strengthened in buildings.
to work as a focal agency for sustainable # There should be market development for
buildings. sustainable habitat and encouragement of
# Capacity building will include vesting national- the industries that process and manufacture
level authorities with following responsibilities. environment-friendly building products like
$ To govern the construction activities taking solar water heaters, photovoltaic cells, energy-
place in the country. efficient household equipment, low volatile
$ To guide and monitor the local development organic compound (VOC) paints, low energy
authorities for energy-efficient building building materials, water-efficient plumbing
techniques. fixtures, sewage treatment units, recyclable and
$ To study, analyse, and document the local reusable products, and so on.
architecture and locally available materials,
and explore and identify energy efficiency ACTION POINTS
techniques in the buildings. # Study on buildings and materials and
$ To explore energy-efficient techniques and development of database for modifying building
their implications in contemporary era. codes to incorporate energy efficiency and
$ To develop new building technologies. sustainability in buildings.
$ To develop building codes for energy # Pilot projects to demonstrate energy-efficient
efficiency. technologies, design practices, and low energy
$ To collaborate with international architects materials. These projects can be taken up
for advisory services. under the ongoing government projects like
# Collaborative programmes with other agencies, construction of housing colonies and school
especially with the Government of India buildings. This would lead to the development of
agencies like the Bureau of Energy Efficiency guidelines for such type of projects.The Ministry
(BEE) to develop database for weather data, of Environment and Forests, Government of
best practices, design norms for Bhutanese India, has prepared similar guidelines, which can
weather conditions, alternative materials, and be accessed at <http://envfor.nic.in/divisions/
so on can be developed. iass/Construction_Manual.pdf>.
# Workshops should be designed for architects
and construction agencies to sensitize them

ANNEXURE
ANNEXURE 7.1 ENERGY CONSERVATION TECHNIQUES IN THE BUILDINGS 4.5
Institutions in the energy sector and

their functions
THE DEPARTMENT OF ENERGY coordination of internal activities, it also coordinates

The Department of Energy (DoE) is a central donor-funded projects handled by the DoE. Major
government agency responsible for the formulation tasks handled by this division are as follows.
of policies, plans, programmes, and guidelines # Complete planning of the energy sector.
related to the energy sector. Formed in 2002, it # Planning and preparing detailed project reports
deals with all forms of energy, including hydropower for new projects.
and alternative forms of energy. It also provides # Executing new projects.
technical advice to the Royal Government of # Negotiating with the Government of India and
Bhutan on all aspects related to energy, including other funding agencies.

formulating development strategy, monitoring and # Coordinating with donor-funded projects.
evaluating implementation plans, and preparing # Coordinating and monitoring with Bhutan
and maintaining programmes and schedules. It Power Company, other power generating
is also responsible for giving techno-economic companies, and other stakeholders.
and budgetary clearances to major projects and # Coordinating with other ministries.
programmes related to energy.

The responsibilities of the DoE are increasing
Hydro-Met Service Division
over the period. It is assumed that it will The HMSD has three sections: hydrology, flood
play increasingly important role in the overall warning, and meteorology.
development of the energy sector. Therefore, The flood warning section monitors flood
there is a need to strengthen and reorganize the warning stations established across the country
DoE. The responsibilities of the DoE are likely to and coordinates with the Government of India
expand and include activities that can be classified/ on flood warning data collection and information
categorized under various divisions, as discussed sharing. The hydrology section is responsible for
subsequently. the collection and analysis of hydrology data for
The DoE has four divisions—the Planning hydropower plant design.
and Coordination Division (PCD), Hydro-Met The meteorological section is responsible for
Services Division (HMSD), and Renewable collection and processing of meteorological data.
Energy Division (RED). Additionally, the Bhutan It has set up 72 weather stations across the country
Electricity Authority (BEA) is also under the and has a repository of the weather data for last few
DoE. years. The division also maintains flood warning
systems, which are established in coordination
Planning and Coordination Division with India.
This division is looking after the overall planning
and coordination work. Besides planning and

ANNEXURE
7.1 INS TITUTIONS IN THE ENERGY SECTOR AND THEIR FUNCTIONS
Renewable Energy Division Planning and coordination

This division is responsible for promoting The activities of the meteorological and hydrological
renewable energy related activities in the country. services department can be classified into three
The division, so far, has concentrated its activities categories.
on the distribution of solar photovoltaic home 1 Routine activities
lighting system, preparation of feasibility reports $ Coordination with other ministries,
for small and micro hydro projects (four projects departments, generating companies, and
are being studied), development of improved cook power corporations
stoves and bukharis in collaboration with Austrian $ Coordination with donor agencies
Development Agency, rehabilitation of solar $ Monitoring of implementation of plans
photovoltaic systems, development of servicing $ Coordination with the Government of India
and training network, and so on. The division has 2 Development of accelerated hydro master plan
also worked on developing the draft renewable and private sector participation
energy policy. $ Private sector participation in the power
sector would increase the responsibilities of
RENEWABLE AND ENERGY EFFICIENCY RELATED the department manifold. Some important
ACTIVITIES functions of the department would include
# Promotion of energy-efficient appliances and the following.
monitoring of the same. - Developing policies and norms for private
# Monitoring of renewable energy resources and sector participation
preparation of long-term database for solar, - Developing site and preparing project
wind, biomass, and other energy resources. reports
# Promotion of renewable energy devices. - Evaluating and approving private sector
# Formulation of subsidy and finance schemes for projects
promoting renewable energy systems. - Monitoring of projects and facilitation of
# Promotion of energy-efficient buildings. project completions
# Development of local capacities in developing - Resolving disputes
and operating renewable energy and energy 3 Implementation of large hydropower projects
efficiency technologies. $ Includes implementation of ongoing and
# Establishment of energy efficiency laboratory planned projects
and making available training, auditing, 4 Management and coordination of National
and other services to industries, hotels, and Load Despatch Centre
institutions for improving their efficiencies.
# Coordination with other agencies and developing
and implementing strategies for using other MODELS FOR RENEWABLE ENERGY AND THEIR
energy resources such as biomass, solar, wind, USEFULNESS AND LIMITATIONS WITH RESPECT
and waste to energy projects. TO BHUTAN
Various financial and business models, which
RED can be renamed and restructured as are successfully used in market-based country
Sustainable Energy Division. situation for delivering solar photovoltaic systems
are as follows.
METEOROLOGICAL AND HYDROLOGICAL SERVICES
# Analysis of hydrology data and preparation of Direct Cash Sales Model
long-term data archives. # The consumer buys the renewable energy
# Maintaining meteorological data in scientific system by either paying cash or by arranging
and internationally approved formats. the dealer credit.

ANNEXURE
INS TITUTIONS IN THE ENERGY SECTOR AND THEIR FUNCTIONS 7.1
# The end-user immediately becomes the owner Concession Model

of the system. # Structurally identical to the Fee-for-Service
Model, with the only difference being the
Credit Sales Model concession availed to serve specified region with
# The model involves a specialist finance partner, some degree of monopoly.
along with a maintenance contract during the # Concessionaire and regulatory-type model
finance term. approach to rural electrification is being tested
# End-user acquires the renewable energy system in many countries and maybe more suitable for
on credit. Credit sales are divided into three rural off-grid electrification.
categories.
1 Dealer Credit Model On receiving all the Rural Energy Service Concession Model
payments for an renewable energy system Bhutan has developed Rural Energy Service
through credit arrangements, renewable Concession Model (RESCOM), which is a
energy dealer/ supplier sells renewable combination of Fee-for-Service Model and
energy system/s to end-user and the end- Concession Model.
user immediately becomes the owner of the With this approach, consumer would not be
system. required to make his own payment, and quality
2 End-user Credit Model After providing third of services is systematically assured. This modified
party consumer credits to the end-user, model also enables the development of market for
renewable energy dealer/supplier sells the renewable energy technologies by creating a critical
renewable energy system to the end-user. mass essential for making commercially sustainable
Usually, the end-user becomes the owner business. Rural energy service provider operator
of the system immediately, but this can be will be selected through bidding for it to have
delayed until all the payments are made. concessional exclusive rights, being technically and
The renewable energy system is used as a financially qualified service provider for a specific
collateral against the loan. region for a specific period of time.
3 Lease/Hire Purchase Model The solar By effective application of RESCOM, Bhutan
photovoltaic supplier/dealer or a financial is planning off-grid electrification of 4000-8000
intermediary leases the photovoltaic system/s households by 2013.
to an end-user. At the end of the lease period,
ownership may or may not be transferred to Getana Model
the end-user, depending on the agreement. The Getana Model has been implemented by the
During the lease period, the leaser remains Department of Energy (DoE) with the purpose
the owner of the system and is responsible of demonstrating a scheme for community-based
for its maintenance and repair. solar photovoltaic energy services. Figure 1 shows
the framework and other details of the Getana
Fee-for-Service Model
Model.
# A large-scale ‘utility–type’ approach that usually
involves providing subsidies to users. HYDROPOWER AND CLIMATE CHANGE
# An energy service company (ESCO) owns the The recently released Intergovernmental Panel
system and provides energy service to end-user, on Climate Change (IPCC) assessment reports
who pays a periodic fee (for example, monthly) have established the phenomenon of global
to ESCO. warming beyond any doubt. The climate change
# The end-user is not responsible for the may bring about a tremendous impact on the
maintenance of the system and never becomes high mountainous glacial environment like that in
the owner. Bhutan. Many of the big glaciers melt and form
glacial lakes. The global warming induces faster

ANNEXURE
1. Capital Nu 2 436 200.00

recurrent budgetary support
2. Spares 252 396.00 Ministry of Finance
3. Service cost 33 480
4. Total 285 876
>2647/hh/annum
Renewable energy
division
Cost of spares/A Service cost per annum

Nu 2337 ´ 108=Nu Nu 310 ´ 108=Nu
252 396.00 33 480
Solar village committee

(solar technicians)
4 technicians, Nu 810/M
Capital cost=Nu
2 436 200.00 Fee collection
Nu 30 ´ 108=Nu 3240/m
=Nu 38 880/A
Solar users
(108 HH)
FIGURE 1 GETANA MODEL
rate of ice and snow melting, leading to a rapid level would also help in assessing the environmental
rise in these lakes. The sudden discharge of large condition of the high mountainous regions.
volumes of water and debris from the glacial lakes
– known as glacial lake outburst flood (GLOF) THE ‘DUTCH DISEASE’
– could cause flooding downstream. The GLOF As detailed elsewhere in this report, the export
can severely damage hydropower plants. This had of hydropower is the mainstay of the Bhutanese
happened in Nepal in 1985 when the Dig Tsho economy. In a classic economic parlance, such
GLOF destroyed the Namche small hydropower a situation might lead to ‘Dutch disease’. A
project. natural resource-based export boom can cause
It is recommended, therefore, to set up ‘Glacial major distortions in an economy by discouraging
Lake Outburst Flood Monitoring and Early production and investment in the non-booming
Warning System’ to continuously monitor the exportables sector, often referred to as ‘Dutch
likely GLOF hazards and take early preventive disease’.1 However, the studies show that there
actions. Towards this end, Bhutan may work with is no evidence of a stagnation of the non-power
the United Nations Environment Programme tradable sector so far.
(UNEP); the International Center for Integrated Nonetheless, it would be prudent to take the
Mountain Development (ICIMOD), Nepal; necessary preventive measures. Given the fact
National Remote Sensing Agency, India; and Asian that Bhutan is blessed with so many natural
Institute of Technology, Bangkok. Such a system resources that can be utilized both for value-added
1
Kojo N C. Bhutan: Power Exports and Dutch Disease. Centre for Bhutan Studies. Monograph #16. 2005

ANNEXURE
INS TITUTIONS IN THE ENERGY SECTOR AND THEIR FUNCTIONS 7.1
products and for power generation, the focus may ENERGY AND MDGS
be concentrated on such decentralized cottage The Millennium Development Goals (MDGs)
industries. Therefore, there is a need to shift reflect an international undertaking to significantly
focus from large, power-intensive industries to improve the condition of the world’s poorest by
small, village-level industries. Such industries can 2015.
be established around decentralized power plants MDGs were drawn from the actions and targets
based on small hydro, biomass, and solar energy. present in the Millennium Declaration that was
Such an approach would also help in minimizing adopted by 189 nations during the UN Millennium
the migration of the rural populace to cities. Summit held in September 2000.
Besides, taking advantage of cheap and abundant Eight MDGs and their 18 quantifiable targets,
electricity, clean environment, and the educated along with their 48 trackable indicators that were
youth, Bhutan may establish itself as a hub for adopted by the UN, can also be compared with
service-oriented exports (for example, software, the targets and goals set by the Royal Government
business, and knowledge process outsourcing). of Bhutan (RGoB). Table 1 gives a glimpse of the
This may fetch much more revenue than the plain goals and targets of the MDGs.
exports of electricity. Needless to say, this would Four main pillars of Gross National Happiness
also result in the creation of job opportunities for (GNH) have been elaborated to guide public
the local youth.
Table 1
MDG GOALS AND THEIR TARGETS
MDG goal Targets
Eradicate extreme poverty Reduce by half the proportion of people living on less than a dollar a day between 1990 and 2015
and hunger
Reduce (between 1990 and 2015) by half the proportion of people who suffer from hunger
Achieve universal primary Ensure that by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary education
education
Promote gender equality and Eliminate gender disparity in primary and secondary education, preferably by 2005, and in all levels of education no later
empower women than 2015
Reduce child mortality Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate
Improve maternal health Reduce by three quarters, between 1990 and 2015, the maternal mortality ratio
Combat HIV/AIDS, malaria Have halted by 2015 and began to reverse the spread of HIV /AIDS
and other diseases
Have halved by 2015 and begun to reverse the incidence of malaria and other major diseases
Ensure environmental Integrate the principles of sustainable development in country policies and programs and reverse the loss of environment
sustainability resources
Halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation
Develop a Global Partnership Develop further an open rule-based, predictable, nondiscriminatory trading and financial system.
for Development
Address the social needs of the Last Developed Countries’ exports.
Address the special needs of landlocked developing countries and small island developing states.
Deal comprehensively with the debt problems of developing countries through national and international measures in
order to make debt sustainable in the long term.
In cooperation with developing countries, develop and implement strategies for decent and productive work for youth.
In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries.
In cooperation with the private sector, make available the benefits of new technologies especially information and
communication technologies.

ANNEXURE
policy: equitable socio-economic development, o Car free Sunday

conservation of the natural environment, promotion o Create public awareness and opinion
of cultural heritage, and establishment of good about energy efficiency and pollution due
governance. to vehicles
GNH is based on the belief that the pursuit of o One family one vehicle
happiness is the inherentt desire of every human - Second/third vehicle can be an electrical
being, and that of every citizen of the kingdom. The vehicle
concept suggests a much broader, comprehensive, # Introduce electric mass transport vehicles
and balanced approach to development. $ Mini busses with frequent trips
The operationalization of GNH, which $ Designated areas for electric bikes/
entailed transposing cultural, social, spiritual, and o Point to point electric/hybrid car service
environmental consciousness into development, - Tourism initiative
has been conducted in Bhutan, essentially through # High quality vehicles to attract tourists
five year plans. # Encourage tourists to travel within city on
trendy electric vehicles specially designed for
THIMPHU AS SOLAR AND RENEWABLE ENERGY Bhutan tourism
CAPITAL CITY BY 2015 # Other alternate fuels
Target is to meet more than 90% energy needs $ Natural gas in border areas
from renewables in all sectors $ Natural gas /hydrogen vehicles in Thimphu
o Global Environment Facility (GEF)/
Thimphu energy balance Clean Development Mechanism (CDM)
Thimphu Dzongkhag has urban energy project
consumption in the residential and commercial $ Trolley ropeways from Motithang to main
sectors. city centres
Major areas: Residential and commercial o Feasibility study can be taken up
Energy consumption areas Small-scale industries

Plan – Phase I Use of natural gas by 2015
Develop plan for transport sector fuel replacement/ South Asian Association for Regional Cooperation
reduction (SAARC) has initiated the process of developing
# Reduce intra-city vehicle movement regional grid and gas pipeline network among
$ Improve public transport SAARC countries, which may be persuaded
$ Curb on vehicle movements earnestly.

ANNEXURE
References and Bibliography
REFERENCES IPCC (Inter-Governmental Panel on Climate

Alam M and Tshering D. 2004. Adverse Change). 1996.Climate Change 1995: impacts,
Impacts Of Climate Change On adaptations and mitigation of climate
Development of Bhutan: integrating change: scientific-technical analyses.
adaptation into policies and activities. Contribution of Working Group II to the Second
Capacity Strengthening in the Least Assessment Report of the IPCC. Cambridge:
Developed Countries (LDCs) For Adaptation Cambridge University Press
to Climate Change (CLACC). Working Paper
No. 2. Bhutan: IIED (International Institute for NEC (National Environment Commission).
Environment and Development) 2006. Bhutan National Adaptation
Programme of Action (NAPA). Royal
ESMAP (Energy Sector Management Government of Bhutan
Assistance Programme). 2005. Technologies
to Convert Biomass to Modern Energy RGoB (Royal Government of Bhutan). 2005.
[Advancing Bio-energy for Sustainable Bhutan Trade Statistics for the Year 2005.
Development] p. 129. Washington, DC: World Thimphu: Department of Revenue and Customs,
Bank Ministry of Finance, RGoB
FAO (Food and Agriculture Organisation). TERI (The Energy and Resources Institute).
1993. Indian Improved Cookstoves: a 2005. IEMMP (Integrated Energy
compendium [Field Document No. 41]. Rome: Management Master Plan) Survey. New
FAO Delhi: TERI
Gyenden L. 1996. Report on the BIBLIOGRAPHY

reconnaissance study of thermal springs
Garud S S and Gurung B K (eds). 2007. Bhutan
(Tsachhus) and medicinal water (Menchhus
Energy Data Directory, 2005. Thimpu, Bhutan:
or cold springs) in Gasa and Punakha
Department of Energy, Ministry of Trade and
Dzongkhag, Bhutan, Thimphu, Bhutan:
Industry
Division of Geology and Mines, Ministry of
Trade and Industry
IPCC (Inter-Governmental Panel on Climate
Change). 1998. The Regional Impacts
of Climate Change: an assessment of
vulnerability. A Special Report of Working
Group II of the IPCC. Cambridge: Cambridge
University Press

REFERENCES AND BIBLIOGRAPHY
IPCC (Inter-Governmental Panel on Climate Royal Government of Bhutan. 1999. Bhutan

Change). 2007. Climate Change 2007: 2020 - A Vision for Peace, Prosperity and Happiness.
impacts, adaptation and vulnerability, Planning Commission. Thimphu, Bhutan
summary for policy makers. Working Group
II Contribution to the IPCC, Fourth Assessment Solar Energy Program review and preparations of
Report. Cambridge: Cambridge University Press sustainable solar energy programmes and project
proposals for Bhutan, United Nations Industrial
MoA (Ministry of Agriculture). 2000. Selected Development Organisation-2002
Renewable Natural Resource (RNR)
Statistics. Thimphu: Policy and Planning Mini-micro hydels and solar PV systems for
Division, MoA sustainable development in off-grid rural areas
of Bhutan ‘Towards Electricity for all by 2020’,
NEC (National Environment Commission). Renewable Energy Division, Department of
2000. Initial National Communication Energy, Thimphu, Bhutan-Nov 2006.
of Bhutan under the United Nations
Framework Convention on Climate Change. The Integrated Master Plan study for Dzongkhag
Royal Government of Bhutan wise electrification in Bhutan, Japan International
Cooperation Agency, Economic Development
NSB (National Statistical Bureau). 2004. Department- Oct 2005
Statistical Yearbook of Bhutan, 2004.
Thimphu: NSB, Royal Government of Bhutan Strategy document (more details, title). Country
Strateg and Program 2006-2010, Bhutan, Asian
NSB (National Statistical Bureau). 2005. Development Bank, September-2005
Thimphu: NSB, Royal Government of Bhutan Renewable Natural Resource (RNR) Statistics-
2000 http://www.rnrstat.bt/csbhutan/documents/
NSB (National Statistical Bureau). 2007. rnrstat2000.pdf
Thimphu: NSB, Royal Government of Bhutan
OoCC (Office of the Census Commissioner).

2006. Population and Housing Census
of Bhutan 2005. Thimphu: OoCC, Royal
Government of Bhutan

Integrated Energy
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Integrated Energy Management Master Plan for Bhutan

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Integrated Energy

Integrated Energy Management Master Plan for Bhutan

The Energy and Resources Institute

PROJECT TEAM ..............................................................................................................................................................XIII

LIST OF ABBREVIATIONS AND ACRONYMS .......................................................................................................................... XV

CONVERSION FACTORS ................................................................................................................................................... XIX

CHAPTER 1 INTRODUCTION ............................................................................................................................................. 1

CHAPTER 2 ENERGY SECTOR – AN OVERVIEW ................................................................................................................... 3

CHAPTER 3 ENERGY SCENARIOS FOR BHUTAN 2020......................................................................................................... 15

CHAPTER 4 ENERGY SUPPLY OPTIONS FOR BHUTAN ........................................................................................................ 39

CHAPTER 5 DEMAND SIDE EFFICIENCY ENHANCEMENT OR ENERGY DEMAND MANAGEMENT .............................................. 57

CHAPTER 6 OVERARCHING ISSUES: ENERGY, DEVELOPMENT, AND ENVIRONMENT ............................................................ 79

CHAPTER 7 RECOMMENDATIONS ................................................................................................................................... 93

ANNEXURE 3.1 PROJECTED SOCIO-ECONOMIC VARIABLES................................................................................................ 99

ANNEXURE 3.2 LIST OF UPCOMING INDUSTRIES............................................................................................................ 101

ANNEXURE 3.3 PROJECTED ENERGY DEMAND IN BHUTAN, BY FUEL ................................................................................ 103

ANNEXURE 4.1 TARIFF DESIGN .................................................................................................................................... 107

ANNEXURE 4.3 BIOMASS DENSIFICATION TECHNOLOGIES .............................................................................................. 123

ANNEXURE 4.5 SMALL WIND SYSTEMS ......................................................................................................................... 147

ANNEXURE 4.6 GEOTHERMAL ENERGY.......................................................................................................................... 155

ANNEXURE 5.1 ENERGY CONSERVATION TECHNIQUES IN THE BUILDINGS ....................................................................... 157

REFERENCES ................................................................................................................................................................ 167

BIBLIOGRAPHY ............................................................................................................................................................ 167

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN III

IV INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN V

VI INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN VII

FIGURE 27 ENERGY CONSUMPTION IN BHUTAN BY 2020 IN EE SCENARIO, BY FUEL ............................................................ 36

VIII INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN IX

X INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN XI

Current project officials

Project field officials from the DOE

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN XIII

EDITORIAL AND PRODUCTION TEAM

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN XV

GLCs government-linked companies LBNL Lawrence Berkeley National

XVI INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

NRDC Natural Resources Development SED Sustainable Energy Department

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN XVII

Electricity: Fuels energy conversion factors

Technical terms used in the report

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN XIX

BACKGROUND both at the rural and

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN 1

# Energy resources and supply assessment, Phase III

2 INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

Energy sector – an overview

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN 3

DEVELOPMENT AND CHARACTERISTICS OF # Industries are the largest consumer of electricity

4 INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

FIGURE 1 ELECTRICITY CONSUMPTION IN 2005, BY DZONGKHAG

from local coal mines was 85 279 tonnes, while

FIGURE 3 TRENDS IN THE IMPORT OF LIQUEFIED

SECTORAL ENERGY CONSUMPTION

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN 5

FIGURE 4 SANKY DIAGRAM FOR BHUTAN ENERGY SECTOR (2005) 5

Residential sector While rural households primarily depend on

6 INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN

FIGURE 5 DISTRIBUTION OF POPULATION IN BHUTAN (2005)

INTEGRATED ENERGY MAN AGEMENT MAS TER PL AN FOR BHUTAN 7